Upwork is an extremely useful tool to begin your freelancing career. As the gig economy (or freelancing economy – whichever you’d like to call it) grows, it’s really important to keep websites with such a large client base on your radar – after all, Upwork has been named the 3rd best freelance website by TechRadar, and has well over five million registered clients actively hiring.
Nowadays, there are so many different modes of freelancing, and almost all of them seem difficult to navigate. Tons of websites will claim to offer freelancers job opportunities, and then charge them through the nose for lessons or job board postings that are only lightly guaranteed to employ them – Upwork is not one of those websites.
There is a way to make substantial money through Upwork. While the platform shouldn’t be your only source of income as a freelancer, it’s definitely an important one to have. Upwork can be a freelancer’s goldmine if it’s used correctly, but it must be used correctly. This article exists to help you figure out one of the ways to use it well – changing your hourly rate on Upwork.
Here’s How to Technically Change UpWork Hourly Rate
If you clicked on this article mostly just to figure out how to physically change your hourly rate, here’s the technical way of doing it: log into your account. Go into My Profile and scroll down to see your hourly rate. If you hover over it with your mouse, a little pencil icon appears next to it. Click on that icon. From here, you can edit your hourly rate – you can increase, decrease, or tweak it however you need.
In procedural summation, go to Home>My Profile> Hourly Rate (hover over Hourly Rate to edit it).
Additionally, when you apply for hourly jobs on Upwork, you have the option to raise or lower your rate when you submit each proposal.
I’m going to include an important point for Upwork hourly rates. Upwork takes a 20% service fee for projects under $500, and a 10% service fee for projects that go over $500. This isn’t a problem for you – charge your client for the service fees. I really cannot emphasize this enough. Don’t pay 20% of your money to do your job. Include the service fee in your hourly rate.
Because you’ll be working mostly from gig-to-gig, I recommend setting your hourly rate, and then tacking 20% onto it. This way, you’ll avoid bearing the brunt of the service fee and make extra money on projects that go over $500.
Instead of hourly, Consider Charging by the Project
This doesn’t just go for Upwork, but also applies to freelancing in general. As a rule of thumb, hourly rates tend to be better for small, minimal-effort projects. They’re a good starting point when you’re growing your Upwork profile, setting your value clearly and concisely right when you open an account.
Once your account gains traction, it’s important to consider charging by the project instead of by the hour. There are many benefits to charging by the project, the most poignant being that you’ll likely make more money. Charging by the project gives you more freedom to work on your own time (you’ll be able to pick up the project and put it down throughout the day without feeling pressed for time or monitored by the clock), and therefore will shift your focus onto perfecting the overall quality of the work. You may start to validate whether or not your hourly should go up, because your fixed-rate projects typically get you more money than hourly ones.
Additionally, charging by the project provides you and your client with an element of ease – both of you know how much money is going to be on the table, and both of you can treat the project as being worth the agreed-upon amount. Both of you will wind up getting more value per hour.
Why charging by the hour made me feel weird
When I first started consulting, I used UpWork exclusively and did hourly work exclusively. This was always a problem because I’d always have the UpWork hourly bot open. It looks like this.
It helps protect clients because it takes a random screenshot of your computer at some point every 10 minutes. This allows the client to see you were working, rather than not working.
I hated this thing. Not only did it feel very “big brother-y”, but it made me feel weird about my working style. If I got up to go to the bathroom and it took the screenshot then, it would look like I wasn’t working.
That made me want to just wiggle the mouse and make it look like I was working, even if I had to go to the bathroom.
But, that feels disingenuous.
How I get 90% of my projects to be fixed price projects
Once I realized I hate doing hourly work, I adjusted my sales pitch on the phone to include talking about pricing. It’s extremely unusual if your potential client doesn’t discuss pricing while you are on the phone with them.
In the beginning, I tried to sell fixed-price work by telling clients I preferred fixed-price. This didn’t work at all because it was very “me” centric. If you’re a consultant, you learn quickly that focusing things on the client is the best solution.
So instead, I started posing it as an option for my clients. I’ll say: “I’m happy to do either hourly or a fixed price contract.” Then, my next line will be a “social proof” point. I’ll say: “90% of my clients prefer the fixed price option.”
Bam, problem solved.
No one wants to feel like their making a mistake and doing something unusual. If they realize that most clients prefer a fixed price, then they’ll pay a fixed price too.
However, and this is key, do not lie to potential clients here.
If 90% of your clients don’t prefer fixed price because you are just beginning to transition to a fixed price, then you should use different language.
For me, I used to say “a good percentage” of my clients prefer a fixed price. That’s not quantifying it. A good percentage could be 20% of clients prefer fixed price, or it could be 75% of clients.
Either way, clients took “a good percentage” as social proof that they should do fixed themselves. Once it did get to be about 75% of clients going the fixed price route, I shifted to saying the exact percentage.
Are there downsides to fixed-price projects?
Absolutely. I’ve been burned a few times.
If you do a fixed price project, but the client ends up taking a lot more of your time than you anticipated, you could end up making less than you would have in an hourly project.
There are two tactics to prevent this.
First, give yourself a bit of a buffer. If you think a project will be $250 worth of work at fixed price, then it might be worth bidding $275 to the client to give yourself an extra 10% in case they are difficult to work with.
Second, do not take projects with shitty clients. When you first speak with clients, you should take an attitude that you are interviewing them. This is obviously difficult if you are just starting out on UpWork. You’ll feel pressure to take any project in order to get started.
It is not worth it. The hours you’ll work and burn out you’ll feel will make you quit consulting forever.
When on the phone with potential client, look for signs that they do not know what they want. If they can’t be clear and answer “what does good look like”, then you should walk away.
The reason why is this: if they don’t know what they want, then you won’t be able to deliver it. In most cases, they’ll end up unhappy.
When Am I Ready to Increase My Hourly Rate or fixed Price on UpWork?
There are a few points your profile should hit when you’re trying to build your hourly rate. For the sake of having each one clearly and accurately pronounced, I’ll devote a paragraph to each.
Here’s what your starting hourly rate should be
If you have just opened an account, you’re going to want to increase the amount of money made (which shows up on your account when you send job proposals). You’re going to want to undercut your starting hourly when you first begin, so take the guidelines I give you and subtract a few dollars until you earn at least $500 on Upwork and accumulate some good reviews and work experience. As a reminder, you’ll want to tack on an extra 20% to your rate to cover the service fee.
Expert: $45 and up
If that sounds low, that’s because it probably is.
When I worked in big consulting for BCG, they billed me out to Fortune 500 clients for almost $1,000 an hour.
When I was building up on UpWork, I did work at $10 an hour to build up reviews and past client testimonials.
Swallow your pride and work at whatever price you need too in order to get started.
Do you have enough positive reviews to increase price?
These are essential. For every few positive reviews, increase your rate an extra couple of dollars. Your employers will base most of their decisions off of their belief in the quality of their future product. A really good way to ensure that they’re swayed in your direction is by accumulating positive reviews – they’ll be less focused on the price, and more focused on the value of the work (at least the good employers will).
More on the review subject – if you do a good job, you’ll get recommendations. People will start seeking you out if they see that you have a successful Upwork profile. Positive reviews are important not just for your profile, but through recommendations among Upwork employers.
When I hire people on UpWork, I sometimes see applicants come through asking for $100 an hour but they have a review satisfaction score that is in the 60’s, 70’s, or 80’s.
I never hire that person. I never even interview them.
If you want to be seriously considered at a higher price point, you need good reviews.
Do you have sufficient work experience?
This is important for two reasons when taken in the context of income: it will allow potential employers to assess your degree of experience and know-how, and it will allow them to see how much money you charged for previous projects that match the ones they’re hiring for. This will set your value monetarily.
For example, I can put in my UpWork profile that I worked for one of the top consulting firms in the world. This is a proof point of my experience and allows me to increase my price.
Everyone has some experience that allows them to increase their price. There is something you are experienced in. There’s also someone on UpWork hiring for that expertise. Put that experience in your profile and boost your prices.
When you are ready, increase your rate quickly
As mentioned above, I did some work at less than $10 an hour. I felt like an idiot.
I graduated from the best business school in the world and I was working at $10/hour.
However, I kept doing that until I had accumulated a 100% review score. Then, I increased prices ASAP to $75 an hour.
Here’s the crazy thing though. Even though the price went up by 7.5X, people didn’t stop hiring me.
So, as an experiment, I decided to double the price to $150.
I still kept getting hired because I had that 100% review score.
The lesson is this: do not increase your prices incrementally. If you have a good review score, odds are most individuals will hire you at a higher price point.
Said differently, don’t work at $75 an hour if you can get work at $150 an hour
Leverage a higher price point to generate more profit
Now that we’ve covered some of those points, I think it’s important to include some extra advice to make sure your experience with Upwork is profitable and fulfilling.
- If you’re new to Upwork, say so. This will help explain to employers the shortage of positive reviews and documented Upwork work experience. The employer can easily see this fact, so don’t run away fromo it.
- Make that profile professional and detailed. You know your stuff, and you’re a serious freelancer. Show your employers you know your shit. Whether you’re a beginner or an expert, you have to know how to market yourself as a worker. Fill up your portfolio (and continue to add to it as you work), consider making specialized profiles, and work on your bio. It’ll be worth your while!
- Go above and beyond on each of your projects. This is a really good way to make sure you get good reviews, but it also helps your work style in the long-run – if you continue to get better at what you do, your work will take you less time and maintain a higher quality. Clients will notice when you do a good job, and they’re more likely to hire you again or recommend you to someone if they’re happy with the job you did.
Still not sure if if Upwork is for you?
This question is extremely important and should be considered before getting started with your own progression on Upwork. There are countless people who leave angry reviews about the website, and the same amount of people who praise it. Let me break down some points about the platform that are going to be really useful in understanding your presence on the site, and whether or not you want to continue using it.
- Upwork is competitive. This is one of the common reasons that people find the platform uncertain. There are so many different freelancers who use Upwork, and tons of jobs that get ten proposals per hour when they first open up. In order to succeed on Upwork, you have to know how to market yourself in a proposal, and you have to be okay with getting rejected more times than you get accepted.
- You must apply to numerous jobs daily to get hired on Upwork. The applications will take up a significant portion of your day – all of them require cover letters and most of them require bonus questions to screen freelancers. I’d recommend setting aside some time in your day-to-day purely dedicated to sending out proposals.
- You will have to spend money on extra connects in order to keep a consistent rate of job proposals. Upwork connects are like application tokens, and you need them to apply to jobs. They are the biggest downsides of Upwork. Honestly, if you’re able to make your proposals stand out and acquire work through the platform, the amount spent on connects pales in comparison to the money you’ll make. But to offset the price of connects spent, I really recommend working hard on your portfolio and proposals so that you don’t waste precious connect money on a rejected application.
Freelancing is a tough, self-starting job, but there are 57.3 million freelancers out there, and by 2027, the majority of workers will be freelance. If you’re starting on this path in 2020, you’re taking steps toward a future that will rely on your ability to know procedures and strategies that you’re developing right now. We are in a fourth industrial revolution that will put tech-driven jobs on top of the economy (freelancing likely being one of them), and ensure that those who possess the skill to navigate the new workforce will live viable lives. Though it’s a difficult career to get started, freelancing can be sustainable and profitable if navigated correctly. Understanding how to make money (via Upwork and other online platforms) can end up being vital to your success as a freelancer.
Here’s a definitive statement: Upwork is 100% worth the work you put in. In order for you to get the benefits of your hard work, you’ll have to be okay with growing your account slowly and building your reputation as a freelancer.
Work hard on each individual proposal, screen your clients carefully to figure out which ones you want to work for (go for the easy-going, helpful clients – it will make your life unbelievably easy and ensure that your work feels rewarding), and aim for the high-paying jobs. You’ll get so much out Upwork if you work hard and keep your wits about you.