Freelancer websites allow individuals who are able to deliver any kind of work through internet to get connected with persons and companies who are looking for resources for having such jobs to be done. Software development, graphical design, blog/website content creation & management, social media marketing and even providing virtual personal assistance are among the most popular services that freelancers provide to their clients by making use of such websites.
Main added value and features of these websites are:
They serve as a market place
Clients may leave their job adds with description and required skills, so that freelancers may apply to the jobs they believe are relevant for them. Likewise, freelancer may create their own profile pages, so that persons or companies to hire may browse the profiles and contact freelancers who they believe are fit for their job.
Several other ranking system, feedback score, success rate and similar rating systems exists both for the clients and freelancers, for helping each party to choose whether or not to work with each other.
They help ensuring getting the job done
One of the techniques employed is making use of tools developed by these websites, which take screenshots of the computers of freelancers in certain intervals while they claim they are working on the tasks for their clients. By this why they are both aiming to discourage freelancers to cheat and at the same time to encourage clients to choose time & money contracts opposed to fixed price contracts (with details explained below).
In addition, in case of disputes between the parties, they try to investigate into the situation by taking into account the screenshots, correspondences between parties, files being shared as outputs of claimed works and any other relevant data for trying to reach a settlement between the freelancers and clients.
They facilitate the payments
This is actually where the website owners make their profit. Since registration to the websites is free both for the freelancers and clients, the only way how the business owners can make profit lays in facilitating the payments.There are two types of contract offered : Time & money contracts and fixed priced contracts.
- For time & money contracts, freelancers and clients agree on an hourly rate and the clients are billed at the end of each week for the amount equal to the number of hours worked by the freelancer times the hourly rate. In order to ensure clients safety, maximum number of hours that can be worked, in other words that can be charged, per week can be defined. In addition, clients may allow freelancers to enter the time they claim they worked manually such as filling a time sheet, or may allow only automated time to be logged, during which the tool that takes screenshot of the freelancers must have been switched on and the time worked is calculated by the system.
- For fixed price contracts, freelancers and clients agree on a total price for the contact and no matter how many hours worked, the total payment to be done is fixed before the start of the job. Nevertheless, a delivery deadline for accepting the job as successfully completed may be set at the beginning. Freelancers and clients may agree on setting up milestones, at the stage which, again mutually agreed percentages of the total contract price is released by the clients. In this model, freelancers hand over the deliverables of each milestone or the final job, claim that the certain stage is reached and clients make the final decision.
So how do freelancer sites make money?
While the percentages deducted may differ from website the website, for instance UpWork deducts 10% from the from clients when transferring money to the freelancers. In other words, if $100 is charged to the client, freelancer receives only $90. While making this reduction, under different terms such as payment cycle, review period, security period, Upwork holds the payment for 10 days after receiving from the client and before releasing to the freelancer – which another way of gaining interest from a money 90% of which is not actually owned by Upwork.