Bad Math

[matthewschenker]

Hi Everyone,

There have been many discussions about real and fake jobs, and the whole process of bidding and boosting. In some of these discussions, I have posted my view that Upwork makes more money on freelancers attempting to get jobs than actually getting jobs, I have argued that this situation is ripe for abuse.

In some discussions, people have disagreed with me and said that Upwork does not make more money from attempts. In this discussion, I want to offer my arguments for why it is obvious that Upwork does make more money from attempts.

The math is pretty simple actually.

Take a typical job, with some modest assumptions for the sake of argument:
- $500 offer
- 50 proposals submitted

- 16 connects needed to apply for the job
- 20 proposals "boosted" with an average of 5 connects spent on boosting

There is only going to be 1 hire for this job, no matter how many freelancers apply. That means Upwork earns $50 commission after the freelancer is hired.

Now let's look at the rest of the picture, which is the attemps to get hired:

- $120 from submitted proposals ($0.15/connect x 16 connects x 50 proposals)
- $15 from boosting ($0.15/connect x 5 connects x 20 proposals)
- $135 total earned from attempts

Upwork earns $135 from attempts and $50 from actual hire. That means Upwork earns $85 more from attempts.

This is a modest example.

Let's go a bit further. Prices for jobs is driving downward, meaning that Upwork is making less and less from commissions. Which means that they are making more and more on attempts as time goes forward. It's simple corporate logic to say that they would build a profit system around attempts instead of hires.

Consider the implications of this.

Anyone trying to tell me that Upwork does not make more money on attempts must offer a counter argument, based on numbers, not feelings.

As long as Upwork is making more money on attempts than hires, we have a problem.

[tjmisny]

This is exactly correct.  I would even go farther - many of the boosted posts I apply to, people are boosting 30-80 connects or more.  

Can you think of any other businesses that make their money from attempts rather than actually providing something tangible?  The only one that comes to mind to me is a Casinno.  

[matthewschenker]

Thomas JM,

Right, I offered what I call a "modest" example just to make the point. As you indicate, in reality freelancers are spending far more than just 5 connects to boost their proposals.

[lungiswa5]

I totally agree, Upwork claims to be returning our boosting connects if we dont get viewed by the client, but they have only done this once for me. The whole boosting thing is quite discouraging for me so much that I have stopped being as active as I used to be on Upwork.

[matthewschenker]

I have not seen any connects returned when my boosted proposal is not viewed! But I have stopped boosting my proposals anyway.

[khushbu_gohil]

Clarity on refund of connects read this...that boosting section note mean nothing they have another parameter 

[ravi_iitian]

Make hay while the sun shines?

[khushbu_gohil]

Yeah I also calculated like that earlier but didn't speak on Upwork community but math is correct

[2bd7a40a]

Great work Matthew. Hmmm - makes you wonder. I've said it before, that clients like me have nothing to discourage us from just creating a job and simply not hiring for it (for various reasons). But what if were true (like many people allege) that there are fake posts deliberately put out there to bait freelancers into applying...

[48f850a0]

Exactly, The same thing with bet shops, they make a little percentage off those who actually win but make the most profits from attempts to win.

We can call Upwork a gambling site, freelancers gamble with connects to win jobs. There's absolutely no lie in this post.

[tjmisny]

It 100% is gambling.  Because there is no way to tell whether or not the client posting the job is serious.  It is a gamble every time you apply when such a small percentage of jobs results in a quality hire.  

[sealvlservices]

Don't forget about the $10 the client will pay Upwork for the privelage of garnering those attempts. 👍

[tjmisny]

There is only a fee charged to clients when they actually hire.  There is no $10 paid for merely posting a job.  

[sealvlservices]

Yes, I'm aware, the OP included the $50 commission so we're assuming the client hired in his scenario.

[feed_my_eyes]

I don't think anyone disagrees that increasing the connects requirement was designed to help Upwork make more money. And yes, freelancers are paying to use the website rather than paying to get a gig. Upwork has something like 18 million registered freelancers, most of whom make little or no money, so when Upwork was entirely reliant on getting a percentage of freelancer earnings, they never made a profit. Now, they're making a profit. 

[matthewschenker]

Christine A,

I have not been on Upwork very long, so I did not really have any experience with the way it was before this.

But if they were not making money just from commissions, that was probably due to the "race to the bottom" nature of the bidding process, which not only hurts freelancers but also hurts Upwork -- commissions on rock-bottom payments are also rock-bottom! Having freelancers drive their prices down to subsistence levels does not help anyone.

A better business shift would be to help drive project prices up, or help make sure there are serious clients here. Just some ideas off the top of my head:

• Charge clients a basic fee to post a job. That would stop garbage from polluting the job pool.
• Minimum-wage structure. For example, a minimum of $15/hr for all hourly jobs. Have minimums for various kinds of projects -- $500 minimum for websites, for example. This would just take a bit of effort to understand what each professional field is worth.
• Add better algorithms for matching freelancers and clients. Deliver "matching reports" to freelancers and clients and facilitate applications based on these matches.

These are just 3 quick ideas. I'm sure that the geniuses at Upwork could figure out all kinds of ways to do this -- if making this a successful job board was their actual goal.

[atlinguist]

Do you want me to tell you how often I was told by 'clients' that an hourly wage of 10$ is 'too expensive'? Have you any idea what the fee structure and pricing range are for industries other than software development? We are not talking about '500 $' job offers here but the lowest possible range, meaning that an entrepreneur or a translation agency from India or Pakistan, for example, (or a cheapo client from the US) will be looking to get something done 'real cheap'. It's a guessing game what these clients are willing to pay if their 'job offer' says 'hourly' or has a placeholder. And there go our connects...

[48f850a0]

You just nailed it. People have posted countless times in this community about the way clients are always looking to pay cheap, posting an hourly contract but then asking for fixed fee and co... Upwork will not address this because ofcus they don't care if you even got the job anyways... Their response to all complaints was to increase the connects.... It's just a matter of time till everyone's cup is full and ditch this joke

[feed_my_eyes]

---

 wrote:

• Charge clients a basic fee to post a job. That would stop garbage from polluting the job pool.

---

Some freelancer or other has made this suggestion in the forum every single day, ever since I can remember. Trying to charge clients before they decide whether they want to hire someone? That would result in way fewer clients here. It's not going to happen. 

---

 wrote:

• Minimum-wage structure. For example, a minimum of $15/hr for all hourly jobs. Have minimums for various kinds of projects -- $500 minimum for websites, for example. This would just take a bit of effort to understand what each professional field is worth.

---

"Each professional field" is worth what clients are willing to pay and what freelancers are willing to accept. Like it or not, this is a global marketplace. Your own hourly rate is very low for a U.S.-based professional; I assume that you're doing this in order to gain a competitive advantage? So why shouldn't other freelancers be allowed to do the same?

---

 wrote:

• Add better algorithms for matching freelancers and clients. Deliver "matching reports" to freelancers and clients and facilitate applications based on these matches.

---

They do have a "best match" algorithm, but it sucks and has always sucked. I'm pretty sure that they didn't set out to make it deliberately terrible, and match clients with completely unsuitable freelancers, so evidently, they're not capable of making it work. That being the case, I wish they'd just stay out of it and let clients decide for themselves.

---

 wrote:

I'm sure that the geniuses at Upwork could figure out all kinds of ways to do this -- if making this a successful job board was their actual goal.

---

Making money is their goal. You already did the math; what do you think will lead to bigger profits - just making a percentage from the minority of freelancers who actually get jobs here, or also making money from all of the millions of freelancers who send proposals every day?

[matthewschenker]

---

 wrote:

---

 wrote:

• Charge clients a basic fee to post a job. That would stop garbage from polluting the job pool.

---

Trying to charge clients before they decide whether they want to hire someone? That would result in way fewer clients here. It's not going to happen. 

---

Isn't that supposedly the idea of this platform -- to have clients only post when they are serious about hiring? If a client has not decided whether to hire someone or not, they should not be posting a job!!! Having more clients posting fake jobs is just an illusion -- a shell game. Yes, reduce the clients to the ones who are serious.

---

---

 wrote:

• Minimum-wage structure. For example, a minimum of $15/hr for all hourly jobs. Have minimums for various kinds of projects -- $500 minimum for websites, for example. This would just take a bit of effort to understand what each professional field is worth.

---

"Each professional field" is worth what clients are willing to pay and what freelancers are willing to accept. Like it or not, this is a global marketplace. Your own hourly rate is very low for a U.S.-based professional; I assume that you're doing this in order to gain a competitive advantage? So why shouldn't other freelancers be allowed to do the same?

---

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---

---

I agree that professioinal fields are what employers are willing to pay. But a platform like Upwork artificially deflates the value. The fact that this is a "global marketplace" makes my points even stronger. Anyone who is sensitive to "international markets" knows that there is a potential for abuse, which hurts all of us. Making the changes I'm talking about adds dignity and respect to those same international workers.

You are correct that my posted hourly rate is low. I originally had it at my proper level of $85/hr. But I was strongly advised that I would get no respones on Upwork at that level, so I reluctantly revised it downward. But I am going to put it back up where it belongs soon!

---

 wrote:

• Add better algorithms for matching freelancers and clients. Deliver "matching reports" to freelancers and clients and facilitate applications based on these matches.

---

They do have a "best match" algorithm, but it sucks and has always sucked. I'm pretty sure that they didn't set out to make it deliberately terrible, and match clients with completely unsuitable freelancers, so evidently, they're not capable of making it work. That being the case, I wish they'd just stay out of it and let clients decide for themselves.

---

Well, then they should fix the algorithm. Kinda simple! Of course they are capable of doing it, if they only had the will to arrange their data properly. I do this all the time for my clients. We don't have to rely on the algorithm, and can decide for ourselves. But having an algorithm that works would help match client and freelancers.

---

  wrote:

I'm sure that the geniuses at Upwork could figure out all kinds of ways to do this -- if making this a successful job board was their actual goal.

---

Making money is their goal. You already did the math; what do you think will lead to bigger profits - just making a percentage from the minority of freelancers who actually get jobs here, or also making money from all of the millions of freelancers who send proposals every day?

---

I'm not naive. Of couse I'm aware that they currently make more money by milking us for our connects. But my whole point here is that they should make structural changes so that they are making a profit from actual hiring. They can do it. They just choose not to. I really hope freelancers start to abandon ship so Upwork gets that cheating everyone is also not profitable!

[natashaabadash]

If they know how to do it they would improve it, alas, they don't so they chose the only option available - a snatch.

You know, in my country police can't find offenders and solve cases, so they pick up a rando, beat the hell out of them so they admit the crime they did not commit, and now they look like they are actualy able to do their job. When in trouble - pretend. 

[2297e2bc]

E-bay has turned this way to.
The E-commerce cash cow has died, simply because the market(s) are too saturated.
Heck, the USPS barely makes a profit either - like farmers in the fields!

[2297e2bc]

Sears made a profit - lost all its customers and folded up the stores!
Guess all the suits in the office towers will never learn!

[maralvar]

I agree. It´s an easy way to earn money. The job is not important. The 55-60% of clients don´t hire anyone.
It would be good to refund the connects if the client doesn´t hire anyone. Someone could think there are bots writing fake jobs, it would be a good business.

[48f850a0]

It's becoming clearer why Upwork allows anyone to create a freelancer account or keeps their gates wide open, it's basically to allow them make changes and not get any hit or drastic consequences... Imagine if only few and hand picked freelancers used Upwork, the majority would have quit at the same time with some silly changes leaving Upwork with some issues.. but with the massive number, no matter the change made... In 20 mins of jobs posted, you have 20-50 proposals... Impossible to have any issues whatsoever and more freelancers are joining on a daily... Maybe they don't read reddit, or take a peep at some comments here ... Probably some YouTube videos keep painting Upwork as heaven.

[tjmisny]

This... and, more freelancers mean more people paying for Connects and the more people feel the need to Boost conencts to compete.  

[2297e2bc]

And, unfortumnately UW has its own INFLATIONARY  metric occuring!

I have to outbid you to oputbid me to be seen on the search page!

I looked for myself yeaterday and never found my OWN AD!

ALSO - UW add listings SUCK compared to other formats. See images 1-2 are UW

[ravi_iitian]

---

 wrote:

It would be good to refund the connects if the client doesn´t hire anyone.

---

Yes, indeed.
No hire: return all connects.

[2297e2bc]

So with this logic, you are also saying that if I own a website, pay Google for views and even more for clicks, Google should pay me back if I don't land a job?

That's like GM asking to get paid back because you saw the commercial on TV but did not buy a car!

We also need a thumbs down vote icon!

[natashaabadash]

Would you be angry if Google took your money and never served that ad to a prospective client? Yea, thumbs down much needed.

[nyonomega0]

I believe there should neither be a thumbs-up button nor a thumbs-down.

[natashaabadash]

I don't care. It wasn't my idea in the first place. I was just making the point. Either way... existance of those buttons is like sooooo important. /s

[2297e2bc]

So we should also remove 5 star ratings on Amazon and E-bay???

[the-right-writer]

Upwork does not promise your proposal will be viewed with boosting. They imply, suggest, hint, infer, insinuate, but they don't guarantee.

[natashaabadash]

Someone could see that as perfectly acceptable. Now, if a boosted proposal ends up in the client's Other folder which happened to many people, well that doesn't meet even the insinuation criteria and I have a problem with that. 

[spectralua]

I saw topic from client an week ago where only 20 proposals (18, don't remember correctly) shown then Upwork asked client for extra money. This 20 was bots and unusable. Want proposal from someone real - pay. Who will use such site? Also i posted fresh example where proposal hidden for sure.

[natashaabadash]

Hey Mykola, would you mind to share a link to that topic if you can find it? It sounds absolutely wild.

[spectralua]

Sorry, i has many free time without works so chatted everywhere. Reading of history will take hours. Cannot find it easy.

I think it was at Clients subforum. Dated week-two ago.

In short: client got 20 proposals then full silence. And message from Upwork "Pay to promote your job to receive more proposals". Like that. It was small amount but noone like to be forced pay for nothing. So he posted topic to share situation.

[natashaabadash]

Sure, no problem. the only thing I thought of is that maybe client spent all 30 invites and then UW offered to extend that limit for a fee which is now 30$ if I'm not mistaken. 

[spectralua]

Should be you talking about this. No, it was another topic, earlier. That client waited for proposals and didnt invited freelancers himself.