If you’ve ever done freelancing or hired a freelancer, you’ve definitely heard of Upwork, which was founded in 2015 after freelancer portals like Elance and oDesk merged. Upwork is an online marketplace that connects freelancers with companies looking for on-demand work.
Speaking of the present, 145K+ active customers and a net income of 5.71 billion. According to Wikipedia, Upwork has over 18 million registered freelancers, over 5 million customers and over 3 million job postings annually, making it the largest freelance marketplace in the world.Upwork’s success has inspired many entrepreneurs to start their own freelance marketplace. But first, it’s very important to analyze Upwork’s business model.
How does an independent marketplace like Upwork work? What is Upwork’s business model? How Upwork makes money?
Basically, Upwork is an online marketplace that connects freelancers who offer different types of services to private clients and entrepreneurs around the world. As a freelancer, you can register your profile, upload your professional details like employee history, hourly rates, reviews from previous clients, etc. On the client side, you can post a vacancy or role mentioning the skills you need. Select the candidate from Upwork’s matching algorithm, chat or call a freelancer and you’re done with the bidding part. Once the agreement is in place, both parties have access to the Upload Workspace environment, through which they can send or receive files, share live feedback and transact seamlessly on the platform itself.
Now let’s take a look at Upwork’s business model. Starting with Upwork’s customer segment, it includes entrepreneurs, freelance workers, and independent professions. Obviously, Upwork’s main partners are freelancers and business owners. The resources and channels required to make an online marketplace work are a platform (website or mobile app) and a global billing and payment system.
For freelancers, it provides a platform to find jobs online, showcase their skills and build a strong portfolio. It also offers flexible working hours and a reliable feedback system. Upwork gives business owners access to choose from over 18 million profiles, find services and job roles in no time, and make secure online payments. Key activities include platform maintenance, customer support, marketing, networking, advertising, and community building. Now let’s get to the important part: how does Upwork make money? Upwork generally earns income from 2 resources.
1. Service Fee: There are no fees for registering and posting work on Upwork. This is essentially to maintain market liquidity for trading. Upwork charges a small percentage fee for each transaction. 5-20% fee depending on total bill. On top of that, Upwork also handles transactions and processes, charging 2.7% payment processing and administration fees on each transaction. According to Upwork’s latest report, 90% of the company’s revenue comes from service fees generated in the marketplace.
2. Subscription Plans: After charging service fees, Upwork generates different revenue from different subscription plans. The marketplace offers 3 membership plans that offer different benefits to business owners. These plans give companies the opportunity to hire better candidates in less time. 10% of total revenue comes from subscription plans and currently has over 124K+ customers who have purchased these plans.Finally, Upwork also charges marketing and advertising fees for professionals looking to promote themselves and entrepreneurs looking to hire quickly. So it comes down to how an independent marketplace like Upwork works and makes money.
This article is shared by www.itechscripts.com | A leading resource of inspired clone scripts. It offers hundreds of popular scripts that are used by thousands of small and medium enterprises.