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Does Upwork Take A Cut? Updated: 2022! (Quick Answer!)

Jamey Muller
Updated: July 6, 2022
6 min read

Just like other marketplaces where you build your portfolio and connect with clients, Upwork has fees and takes cuts on your earnings.

Learn how much Upwork will dock from your yields with this guide.

Here’s If Upwork Takes A Cut:

Yes, Upwork charges a freelancer service fee for all earnings. This is a sliding fee based on your lifetime billings with clients. For your first $500 in earnings, Upwork charges you 20%. From $500.01 to $10,000, the service fee is 10%. For total billings that exceed $10,000, Upwork takes a 5% cut.

The more you work with a client, the smaller the cut taken from your earnings.

Since the fee structure is sliding, the cut will decrease the more money you earn from that specific client.

This is true for all your contracts, be it hourly or fixed-priced.

This service fee is included in the amount your client will see on your proposals and contracts.

If you want to see the breakdown of the fees you pay for each earning, you should go look in your transactions and earnings reports.

The income portion is the total amount billed to your client. In the deductible business expenses section, you will find the fees you paid.

As an Upwork freelancer, you get paid in two ways – hourly or fixed price. The fees are the same for both.

For instance, in your hourly rate for your first gig, you listed $20. When the client pays you, you can expect to earn $16 after the 20% service fee has been deducted. 

When your earnings for that client hits $500, this fee will drop to 10%. From the $20 hourly rate, you will then earn $18.

The same computation applies to your fixed-price job. If you get paid $400 for a gig, you will receive $320 after the 20% cut. 

Once you have billed $500 with the client, the service fee will decrease to 10%.

If a single payment by the client crosses a fee threshold, you will be charged at a blended rate.

For example, you earned $600 from a new client. 20% will be cut on the first $500. For the remaining $100, you will be charged 10%.

Upwork will automatically apply the lower service fee once its system detects that the freelancer’s total billings have exceeded the fee ceiling.

Again, you will see the breakdown of the service fee invoice in your transaction history.

Upwork has a few exceptions when taking cuts from a freelancer’s earnings.

Top-rated and rising talent freelancers pay reduced service fees when hired for featured jobs on the platform.

Meanwhile, those who are participating in the Upwork Payroll service are excluded from paying service fees since they are paid via a third-party staffing firm.

Does Upwork Take A Cut From Bonuses?

Yes, Upwork takes a cut even from bonuses. The same charges apply depending on your total billings – 20% on the first $500, 10% above $500, and 5% above $10,000. This is clearly stated in the platform’s terms and conditions. 

As a freelancer, you must bequeath a fraction of your earnings on all billings to Upwork, including milestones and bonuses.

Upwork takes a standard percentage fee for any money coming into your account, so there is no getting away with it.

You will automatically be charged when your bonus goes through the Upwork system.

The fee structure has been set in place to prevent wayward individuals from abusing the system.

A loophole may result in some freelancers receiving huge payments as bonuses that will not be charged by the platform. 

Upwork Fees For Buyers

Upwork clients or sellers are charged fees by Upwork. The platform recently moved from having a two-tiered subscription model to a simpler one.

Instead of separately paying a subscription fee and a processing fee, clients will be charged only one fee (5%) per transaction.

The Client Marketplace plan combines the basic and Plus subscriptions, where clients have to pay only a fixed percentage on contracts.

This applies to hourly and fixed-price jobs, project catalog projects, Bring Your Own Talent (BYO) contracts, and bonuses.

For example, if you pay $100 to a freelancer, you will pay an additional $5 to Upwork.

The platform offers a discounted rate for eligible clients from the United States who utilize checking accounts for payments. Instead of 5%, they only need to shell out 3%.

The fee is assessed any time Upwork charges your billing method. For full visibility, it is listed as a separate line item for both your payment receipt and transaction history.

For hourly projects, the fee is applied to your weekly billing method. The same applies when you pay any bonuses.

For fixed-priced projects, the fee is charged every time you fund a milestone or give a bonus. For project catalog projects, the fee is applied whenever you purchase a project.

This does not apply to clients who signed up for Upwork Enterprise services.

Meanwhile, some clients opt to use Upwork Direct to avoid paying the fee. 

Upwork Direct is a special feature that lets clients pay freelancers directly from their accounts without the burden of a processing fee.

Upwork Fees for Sellers

All the Upwork fees you pay as a freelancer can significantly affect your earnings. Aside from the service fee you give for every payment, you also need to pay for connects and upgrades.

Upwork charges freelancers commissions on all the money that goes into their account. Depending on your total billings with a client, you will be charged up to a 20% service fee.

The rate drops the more work you do for a client. If your total earnings reach $10,000 and above, you will only pay a 5% service fee.

Most freelancers go for the basic (and free) plan on Upwork. While you get ten free connects per month, once they run out, you need to buy connects so you can apply for gigs.

If you want to upgrade your basic account to Freelancer Plus, you have to pay 14.99 per month for the membership.

You will also get 70 free connects, but when you have already consumed them, you will have to shell out for more connects. 

The price of each connect is Upwork is $0.15. You can buy them in bundles of 10, 20, 40, 60, and 80 connects.

The most number of connects you will pay for an Upwork gig is six, so you will be paying $.90. Small jobs cost less.

While this is a relatively small amount, you only pay for the application. There is no guarantee that you will get hired for the job.

If you have trouble securing gigs, you will need to buy more connects so you can send proposals. 

How Else Does Upwork Make Money?

Upwork can earn money in two ways: premium subscriptions and service fees. 

Using Upwork as a platform, freelancers can offer a variety of services to clients. These can range from graphic design and software development to website/blog content generation to virtual personal help.

As a freelancer, you can reach out to potential clients located across the globe and secure high-paying jobs.

Upwork charges a percentage fee for every successful transaction it expedites.

As the marketplace operator, the platform takes a 20%, 10%, or 5% service fee from your earnings. This should be based on your bill’s total amount.

Since Upwork is responsible for handling payments, a fee is paid by clients for every completed transaction. A 5% processing fee is applied for every payment they give to a freelancer.

Upwork also provides payroll services to clients. The fee depends on the type of engagements they have on the platform.

In total, 90% of Upwork’s revenue comes from these fees. 

Upwork also gains profits from memberships and subscriptions. Freelancers can apply for a Freelancer Plus account for a specific amount for their monthly subscription. 

The Plus account offers a variety of benefits, such as a customized profile URL and more insights into bids.

For clients, they have the choice to upgrade their basic plan to two premium subscriptions – Upwork Plus and Upwork Business.

The basic plan is free, but the other two options are not. The Plus plan costs $49.99 monthly, while the Business plan charges $849 monthly.

These upgrades enable firms to hire better applicants more quickly. There are also a host of other features that subscribers can enjoy, including account managers to assist in the hiring process and tools to track projects.

Overall, the subscriptions take up around 10% of Upwork’s revenue.

Sources:

Upwork: Freelancer Service Fees
Upwork Support: Client Payment Processing Fees

Written by
Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.
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Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.