1% to 3% won't even cover the direct costs of being an intermediary for payments if you e.g. accept credit cards.

Such levels of pricing is not sustainable unless you're burning money to provide the service at a loss while you gain market share and network effects.

I agree that 20% fee seems excessive, but as soon as you're handling other people's money, 1-3% are not reasonable rates, they are unrealistically low, not feasible even for a non-profit that has all volunteer workforce.

It may be feasible to have a very low fee business model if you expect everyone to pay each other directly, but that still means managing all kinds of nonpayment and fraud issues, which takes a lot of time and thus expenses.

Bitcoin has several solutions here. First of all the transaction fee is small, around $.05 at the moment[1]. Second, there are contracts and escrows[2,3] which would support remote work by strangers.

1. https://bitcoinfees.21.co/

2. https://en.bitcoin.it/wiki/Bitcoin_Escrow_Service

3. https://en.bitcoin.it/wiki/Contract

Exchanging money for BTC (the buying company) and BTC back to money (so the worker can pay rent and buy food) isn't fast nor free, and is likely to cost more than the 1-3% once all those expenses are factored in.

BTC is a possibility for settling particular purchases, but it's not the best way to receive your main income, it's like getting paid in an obscure foreign currency.

More places are starting to take it. It might end up being a grassroots thing.

Last month I was at a sheep and wool festival (yeah just what it sounds like) in central MD, visiting a merchant in a straw floor awning tent at the county fairgrounds. He had a sign up saying he preferred BTC because card fees kill him. My wife whipped out her Mycelium app and the transaction went through in seconds.

It's not Macy's or Amazon yet, but it's getting there. Overstock takes it.

Bitcoin is still a relatively new concept with limited implementation and infrastructure throughout the world. But it is certainly promising.

of course, 1%-3% doesn't make sense if you want to be in the control of the transaction between the freelancer and the client. But you don't have to be. The client should pay the freelancer as he see fits, in euros, pounds, bitcoin, shells or giant round stones.

If you can leave that aside and just charge the freelancer with that 3%, let's say. If this doesn't make sense, you can always set a minimum charge, like 5 euros or 3% of the transaction, which ever is bigger.

If you don't have your hands in the transaction, then you'll be cut out if the transaction as soon as both parties are comfortable with each other.

That may be ok, but is definitely far less sustainable, as you have to keep creating new matches (as opposed to being paid for an existing match continuing).

You are right, but the same can be done over current Upwork; once I trust a freelancer, I can deal outside the Upwork range, using a normal contract.

However, the most freelancers get short jobs and many clients, as in the original article is specified, so this just simply works.

EDIT: it seems that as currently implemented, even Upwork is bumping in a search the ones with many hours/money earned. So cheating would be a bad decision, since it may drastically affect your visibility on the site

> So cheating would be a bad decision, since it may drastically affect your visibility on the site.

And may be one of the primary reasons for this "feature". I don't blame them, they are a marketplace and should encourage transactions on their platform.

Encouraging transactions on their platform benefits the people too, since the platform offers some degree of protection to them.

They seem to be alienating certain groups of freelancers deliberately.

Agreed - this new pricing structure hits hard for freelancers that do smaller jobs for many different clients, whereas for freelancers that bill larger amounts and have a longer client relationships, this will save them money (5% vs. 10% fee).

I guess the small-jobs-for-new-clients-each-time take up a disproportionately large amount of support work for Upwork.

Ebay tried the same trick in the past, chasing off the platform thousands of small "unproductive" sellers. The problem is that this sellers were also specialized buyers spending money and many hours chasing rare items in Ebay AND showing their trophies to all their family and friends to see. Ebay lost not only some fine and loyal buyers, but also tons of great free advertising. In the end this lead to losing a lot of momentum as company, that probably helped to the raise of Alibaba.

Freelancers are also numerous and cheap and Upwork definitely can afford to lose some of them, or even a lot of them, as long as keep the clients. But, as in the case of Ebay, the problem is that small contractors are also potential clients. Moreover, small clients add an interesting and very desirable collateral effect to the platform: A big increase in job diversity. If you alienate those people, you risk to lose some money, but also the outliers, very specialized freelancers interested in solving rare problems or offering less common experiences in many fields.

As Ebay before promoting big asian sellers with a lot of transactions, It seems that Upwork is mostly interested in big clients with lots of work that needs to be done, posting again and again the same type of jobs. This could lead to:

1) The same few stablished freelancers being hired again and again. New freelancers eventually will lost interest and leave the platform, or will be swallowed by the sucessful freelancers, now stablished as agencies or farmers, and forced to work for less money.

2) ... Or there is always a different freelancer hired. This would point to a problem with quality of freelancers or clients (can't keep any freelancer for much time and need to repost the same job each month).

3) ... Or nobody is hired. A red flag that could be seen also as a worrying symptom of "ashley-madisonization" of the platform.

I hope the best for the company, but it is unclear currently to me if this will be a smart move or a big mistake.

Regardless of how you analyze it, it was clearly a mistake because the platform is literally driving many freelancers away (many contracts are short-term or <$500 contracts). The least kind thing they could have done is make the announcement about the pricing change at least one year prior the implementation, so that affected freelancers could take appropriate actions. Profit-wise, it could be considered a smart move, but even that is an uncertainty.

But once you have 14 million users, what prevents the 5 guys from going: "Hey, you know what? If we just bumped up rates to 6%, we'd make a lot more money and we won't lose too many people. We're providing a great service and a lot of the customers are happy to pay that amount."

Make it a co-op. Build restrictions into the corporate bylaws such that classes of members can check and balance acts like this. Implement profit-sharing, so not only would that 1% increase in fees help fund development, but it would also be returned in part to platform members. Of course it may be necessary to increase fees once you've got an actual idea of what your expenses will look like, and profit-sharing may necessitate a larger increase, but then everyone has incentive for the platform to succeed.

Some smart people really think alike. +1 on that!

I would agree such a change if this would be justified transparently, like we need extra servers or we need to hire an extra guy for development of your most voted features, and so on. If such a decency level would be available, I would be their customer.

Remenber, once you fragment this market ( maybe 10s of such online freelancing services ), the market rules apply and prices will be kept down.

"If such a decency level would be available, I would be their customer" I guess others would too.

This is where integrity and vision come into play. If you want to bump it into 6%, you should explain why. It should not be all about profits. If it is, then such platform won't be different from Upwork.

Integrity and vision are great, but I wouldn't want 14 million people to depend on it.

For example, if someone else feels the potential is underutilized, they could offer to buy it and then bump up rates.

How do you structurally make sure that the motive is different?

Some kind of collective idea might work. The model should be the stock market. Trading costs are getting lower, transparency is going up etc.

"offer to buy it" meaning investors would come in? That could sabotage the vision down the road.

If bumping up rates would benefit the community, why not?

"There is not necessarily a need for 100% community effort." Why do you think so? Can you explain?

You need money to provide a reliable service.

You can adopt the Wikipedia style and ask for donations, or just make a company behind it, with decent people ( as opposed to a corporation, with stakeholders, etc).