It’s 2013, and the freelance marketplace industry is booming. From old-timers like Elance, oDesk and 99designs, to relatively recent players like Fiverr, Tweaky and People Per Hour, these marketplaces are growing faster and becoming more profitable than ever before. But is this a good thing for freelancers? Which of these services should we consider, and which should we avoid?
In this article, I’ll compare the key players in the industry as they stand in 2013 and dive into the pros and cons of using them to find work as a freelancer.
Category: Crowdsourced graphic design marketplace.
How it works: Buyers set a price for the graphic design work they want done and create a “contest”. Designers compete to finish the work, receiving occasional guidance from the client. The designer who creates the winning design will be paid. The client receives the final files and copyright over the work.
Freelancer pros: You are judged by your work. At any given time, over 1,000 design contests are running and designers can enter as many as they like, with a chance to win in each. You don’t have to wait for clients to choose to work with you.
The competition format can be enjoyable. Designers who frequently enter competitions enjoy the thrill of potentially winning. The format reframes design work as a game and a challenge.
Because 99designs is more expensive than many other design marketplaces, freelancers can earn decent prize money for winning designs.
For new designers, 99designs is an opportunity to practice working from a real brief for a real client. Even if winning is rare, learning how to fulfill a client brief can be useful for an inexperienced designer.
Freelancer cons: Most designers on 99designs will enter more competitions than they win, often meaning they are working for free. For every competition won, the earnings must be divided between every competition lost to calculate the true earnings for your 99designs work. For example, 99designs user Keegan has won 288 competitions for 3,978 entered. Most contests have poor odds of winning, pitting you against 30 or more other designers.
When you enter a competition you are never sure whether the client will like your work or whether your work will be compensated. The initial uncertainty, hope of reward and occasional payoff bears some resemblance to entering the lottery. Some designers may find this addictive. Good if the designer is earning a reasonable income from the site, but harmful if they are not.
Crowdsourcing is stigmatized in the design community, and many designers and thought leaders in the design community are vehemently opposed to crowdsourcing, seeing it as an exploitative practice that encourages designers to work for free, a form of “spec work”. If you have a history selling on 99designs and then decide to apply for jobs in the design industry, mentioning your involvement with a crowdsourcing site could be controversial with some employers.
What’s new: 99designs recently launched new categories for landing page, email and infographic design. In February, the community reached 200,000 designers.
The verdict: 99designs is a love/hate phenomenon in the design community. If you like the idea of entering and winning competitions, sometimes earning prize money and sometimes earning nothing, then the service may be for you. If you would prefer to be guaranteed pay for your work, one of these other freelance marketplaces might be a better fit.
Category: Bid-based freelance marketplace.
How it works: Clients post a job, either attaching a price-range or leaving it open. Freelancers submit proposals including a customized message about why they’re the right person for the job and how much they will charge for the work. Payment is based on the freelancer achieving key Milestones and, for hourly based rates, can be guaranteed by the user of Elance’s Work View tool. This tool takes screenshots of the freelancer’s screen as they work at 12 minute intervals.
Freelancer pros: Elance offers freelancers automatic time-tracking and takes care of billing.
The website has been around since 1999 and pioneered the freelance marketplace industry. As a result, it’s very popular with job posters and there are lots of jobs available in many fields. As I write this, over 93,000 jobs have been posted in the last 30 days. Because of the sheer number of jobs available, Elance is a popular choice for freelancers around the world.
The 8.75% fee on jobs is relatively low compared to some other freelance marketplaces, where fees can be as high as 20% – 50%.
The website includes extensive detail about prospective clients, including the value of jobs they have purchased so far on the site. This may help freelancers make a more informed decision about who to work with.
Freelancer cons: Freelancers must submit bids (called proposals) in order to be considered to do a job. Bids include a customized message and an hourly rate or fixed price offer. A freelancer might need to submit numerous proposals before winning a job, possibly at a low rate in order to compete with other freelancers on the site.
For jobs done by the hour, Elance’s Work View software must be used in order for payment to be guaranteed. Work View takes 5 screenshots of the freelancer’s screen every hour and some freelancers have seen this as an intrusive measure.
For fixed priced jobs, the minimum for a proposal is $20, even if the budget is up to $500. For hourly jobs, proposals can be as low as $3 per hour. Based on my browsing of the site, the average rate for web development jobs is $10 – $15 an hour and the average for writing jobs is around $10 an hour. These rates may be seen as low by some freelancers.
What’s new: Elance is currently rolling out a re-calibrated version of its ‘Levels’ system, including a new ‘Recommend Score’ which is promised to “more precisely differentiate the level of client satisfaction between each member of our community.”
The verdict: Elance may be a good choice for freelancers who can charge rates that are low on a global scale, but reasonable for their cost of living. The service’s proposal-based system rewards freelancers who are able to offer the lowest prices. Freelancers who need to charge higher rates may find it difficult to win jobs.
Category: Micro-services marketplace.
How it works: Bills itself as the world’s largest services marketplace, with services starting at $5. Sellers offer ‘gigs’ ranging from the mundane (data entry) to the bizarre (shout anything you want in a banana costume). Buyers pay a fixed price for each service, usually $5. Service categories include video, design, writing, web development and marketing.
Freelancer pros: You can sell just about any skill on Fiverr and will not be subjected to a harsh review process. The low barrier to entry makes it easy for freelancers to start selling. As a test, I created a service on Fiverr and it was live on the website within 24 hours.
Fiverr is well-marketed, with some services having achieved several hundred sales.
Fiverr offers a detailed visual dashboard for sellers to track their speed, earnings, response ratings and next actions. It also rewards freelancers with seller levels and ratings which advance as the seller’s business grows.
Though not possible for all gigs, some gigs (like recording brief video messages) may only take a few minutes for an experienced seller to complete. This could result in a reasonable hourly rate.
Freelancer cons: With most services fixed at $5, the low price is a common complaint about Fiverr. Though some gigs may only take a few minutes to complete, others, like detailed sketches, building iPhone apps, writing articles or designing logos, take at least 1 hour to complete. This can translate to an hourly rate of $4 – $5 or less, making Fiverr unsustainable for many freelancers.
On a service sold for $5, $1 is deducted as Fiverr’s fee (set at 20%). This means sellers only earn $4 on a $5 service.
What’s new: Fiverr recently launched a full redesign and are slowly moving away from a fixed $5 price-point, starting to offer higher priced gigs.
The verdict: Fiverr may be worth investigating if your local cost of living is low or if you believe you could complete several gigs in an hour. For many, the standard $5 per gig rate may be unsustainable.
Category: Digital services marketplace.
How it works: Freelancers must submit their proposed services for quality review by Microlancer staff. If approved, freelancers post services, work examples and choose a price, turnaround time and number of revisions for each service. Buyers who’d like to purchase the service must pay upfront and provide a brief to the freelancer. Payment for the job is kept in holding while the work is done. Once the job is completed, payment is released to the freelancer.
Freelancer pros: Freelancers can, within a wide range, choose their own prices, turnaround time and the number of revisions they will perform for a job.
Payment is collected from buyers upfront and, if the freelancer does good work within the turnaround time they have promised, they are guaranteed to be paid, even if things go south with the buyer.
Freelancers are only contacted when a buyer purchases their service, eliminating time spent on leads that don’t go anywhere.
Microlancer handles payment, invoicing and dispute resolution, and minimum prices for each category prevent a race to the bottom.
Freelancer cons: Microlancer takes a hefty 30% cut of each job. This platform fee is above average for the industry.
All services must go through a review process where they are checked for quality and professional presentation. Freelancers may invest time in preparing their services for sale, only to find that they are rejected during the review process.
Microlancer is a relatively new player on the scene and, since launching in April of 2013, some categories have yet to achieve much traction (for example, the 3D design category appears to only have 5 sales).
What’s new: Microlancer is currently launching coding services in 3 key categories: PSD to Website, Web Development, and WordPress.
The verdict: Freelancers may be attracted to Microlancer’s pricing system, which allows freelancers to set their own prices. The onus is on buyers to approach freelancers for their services, rather than on freelancers to pitch for jobs. For those freelancers that do pass the review process, the challenge will be in making sales while charging enough to cover the service’s steep platform fee.
Category: Digital services marketplace.
How it works: People Per Hour’s services come in several different flavors: Hourlies (fixed price services posted by freelancers), jobs posted by clients (which then receive bids from freelancers), or direct contact between freelancers and clients. Clients pay a deposit upfront.
Freelancer pros: After the first £175 (roughly $280 USD) earned in a month, which incurs a 15% fee, the fee for any earnings over this amount is only 3.5%.
The number of options available for receiving work, either through posting Hourlies, bidding on jobs, or being contacted directly by clients, offers freelancers a degree of choice.
Freelancers can post their profiles to a directory and list rates of their choosing. I saw rates everywhere from $5 to $1.5k per hour. Freelancers earn rewards and gain levels based on activity on the site.
Freelancer cons: Very low price minimums for ‘Hourlie’ (fixed price) services mean it’s necessary to compete against freelancers charging $12 for 3 logo design concepts and unlimited revisions, in-depth SEO analysis for $9, or $9 for a 1000 word article on any topic.
The bidding system for jobs posted by clients means you may submit numerous proposals without any success, or be frequently undercut by other freelancers willing to charge less.
What’s new: People Per Hour just launched a ‘Hire Me’ widget. Freelancers can embed this on their websites and blogs to help encourage clients to hire them via People Per Hour. If you are hired via the widget, People Per Hour does not charge any commission fees on the job.
The verdict: People Per Hour seems like a promising service for freelancers, allowing them to post services at a price they choose, or upload a profile listing their standard hourly rate. The 3% rate for high-earning freelancers is competitive. As with many freelance marketplace, job bids and hourly rates as low as $9 could make it tough for some freelancers to get hired at the rates they need in order to run a viable business.
Category: Website and WordPress customization marketplace.
How it works: Clients create a job brief for the customizations they need and Tweaky will break it down into $39 increments. A freelancer will then complete the project. The website also offers fixed price services, such as Google Analytics Setup and Basic Training for $250, or a Website SEO Audit for $249. Freelancers must go through an application process to work on Tweaky projects.
Freelancer pros: A pro for some, a con for others, freelancers will work with a dedicated Project Manager on every Tweaky project. Project Managers maintain the relationship with the client and ensure the job is on track.
Freelancers are only contacted when a job has been paid for and is ready to start. No time wasted on leads that won’t go anywhere.
Some freelancers may not enjoy working with a Project Manager overseeing each job.
Freelancers may spend time going through Tweaky’s in-depth code review process, only to be rejected at the final hurdle.
What’s new: In April of 2013 Tweaky hit profitability, 9 months after launch.
The verdict: There’s little information available on the experience of Tweaky’s developers. Though the 50% rate is hefty, the client-facing prices are high enough that freelancers are still likely to earn a reasonable hourly rate for their development work.
Freelance marketplaces continue to grow and multiply as both clients and freelancers become more comfortable with working 100% online.
For clients, things keep getting better: more choice, more talent, lower prices and greater protections against low-quality work. 100% satisfaction guarantees are becoming standard across the industry, and choice is at an all-time high. It is surprising what some freelancers are willing to do for just $5.
For freelancers, the growth of such marketplaces is a blessing and a curse. There are dozens of choices on where and how to offer your services, and yet, tougher conditions and more competition than ever before. Most marketplaces allow rock-bottom prices, and freelancers in countries with a high cost of living are reporting that it is hard to compete. In light of these pricing pressures, covering platform fees ranging from 15% – 50% may be a challenge.
Overall, freelance marketplaces can be transformative for highly price-competitive freelancers, freelancers who strongly dislike self-promotion and chasing leads, or for freelancers who don’t have many available clients in their local area.
Do you sell services on any freelance marketplaces? Has the experience been positive or negative for you?