How much would you pay to apply to a job posting?
Would you even bother applying if you had to pay?
Upwork made the bold move of announcing they are now charging freelancers 15 cents per credit to make a proposal (costing 1-6 credits).
Fifteen to ninety cents doesn’t sound like a lot, but to Upwork it’s got a few benefits.
- Decrease the noise in proposals, makes job posters happier because there are less “bad” proposals
- Increased chances of a winning proposal. Less incentive to apply to every job you see because it will cost you.
- Increased revenue for Upwork?
Now the increased revenue is not a given. That’s because the number of proposals for each posting is likely to go down and now there could be a chance that a job poster doesn’t get any applicants (especially for more niche needs).
They could see a revenue increase because there will now be 15 cents per proposal coming in.
How does it work?
Essentially, it’s 15 cents per “connect” and the cost to submit a proposal is 1-6 “connects” which Upwork gets to decide.
Bigger projects are 75 to 90 cents while a $50 job is 15 to 30 cents. And you have to buy the connects in bundles (of course).
Upwork already charges freelancers 20% (!) of their contract amount before $500 and then 10% after that (don’t remember what it is above $10k). So it’s not like Upwork isn’t already making money off freelancers.
Why do this?
Why would Upwork want to upset their freelancers?
Because they have a near monopoly in the space! Besides more specialized freelancer sites like Toptal (which I really wouldn’t say is an Upwork competitor), there isn’t another site that has as many freelancers and job postings.
I’m sure Upwork did the math and assumed a certain number of freelancers would drop off, but they’re likely assuming those are lower quality freelancers anyway.
If you’re an upset Upwork freelancer that wants to stick it to them and leave, well where are you going to go? Fiverr? People Per Hour? They’re just not that great.
This move is forcing freelancers to have skin in the game. They’re now having to put money down to apply for jobs. This means more time spent on the proposal and more time spent considering which jobs to apply to. You’re not going to want to waste 90 cents on a job you don’t think you’re qualified for versus 90 cents on one you have a high certainty you can land.
Here’s how Upwork explains their decision to make this change:
We know this is a big change. Before deciding on this new Connects system we interviewed many freelancers, agencies and clients about their hiring concerns and Connects usage. We also thoroughly researched platform hiring and proposal trends. We found that most freelancers do not utilize the full 60 connects they were provided with each month. Because of the surplus in Connects, many freelancers are less selective when submitting proposals and often times submit proposals to jobs not suitable for their skillset.
Experienced freelancers have noted that newer or inexperienced freelancers saturate or spam clients with irrelevant proposals, which creates unnecessary friction. Clients have also told us they are often overwhelmed with the number of proposals they receive, especially when many of the freelancers may not meet their project requirements. This can lead to a frustrating and unproductive experience for all parties.
With the new Connects system our goal is to help professionals win more projects. With paid Connects we expect freelancers will submit fewer proposals, ones that are more tailored to their skill-sets and the requirements of the project. Thus helping clients find more qualified candidates and reducing the friction caused by the high number of proposals sent by freelancers who may not be qualified or have the right skills for the projects they’re applying to. We are confident this will increase hiring rates and make it easier for clients to identify high-quality talent and for high-quality talent to connect with great clients.
It seems a little crazy to me to blame it on a “surplus in Connects” because Upwork was giving people 60 connects for free each month. If that’s the issue, why not limit the number to 10 or 20?
Why not use a system that weeds out these “spammy” proposals. For clients that get a really bad proposal that is not very relevant to their project, they should be able to mark it so. A freelancer who gets too many of these gets a strike, and multiple strikes means they’re forced off the platform.
I can see quite a few other ways Upwork could have tried to fix this “friction” problem.
Still, it’s the cost of doing business.
If you 80 credits for $12, you can apply for 16 5-credit postings.
Not that this is a smart move for Upwork, clearly the reception is quite strong to such a big change, especially when it’s one that is charging freelancers more to use the platform. But I see the intended benefits and it will be interesting to watch how this plays out.