In today’s day in age, more and more individuals are leaving their day jobs to instead start their own business, find independent work and pursue their personal passions. This trend is growing with each passing year, as workers of all ages, skill sets and experience levels continue to find success in the booming gig economy.
One of the key drivers of this spike in popularity is technology—73 percent of independent workers say technology makes it easier to find freelance work. A prime example of this is online talent platforms, which provide a space where anyone can showcase their skills and gain direct access to a large pool of potential clients. Despite these benefits, most platforms have membership fees or charge commission. This affects providers and clients alike—impacting potential earnings and increasing the cost of services.
Hefty Commission Charges
It comes as no surprise that most online talent platforms charge commission on completed projects and contracts. The popular ride-sharing app Uber charges a 25 percent commission fee for drivers, while the growing home-sharing app Airbnb charges a 3-5 percent “service fee” on all transactions for hosts. Upwork, a widely-used freelancing app, recently made headlines by shifting its commission model from a flat rate, to a rate that lowers as workers make more money on the site.
The drawback: High commission rates limit who can realistically use an online platform.
People who offer services such as accounting, business consulting and graphic design will likely make enough from single projects to be able to afford high commission charges. However, those who offer services such as cleaning, pet care and child care can sometimes make as little as $20 per project—making high commission rates a major barrier to a lucrative career.
Increasing Membership Fees
Although online talent platforms offer helpful resources, there is a misconception that these resources are actually free. Aside from commission, many sites have membership fees for users, while others mask this fee with membership plans where the more you pay, the more you get. Freelancer.com, for example, has a basic membership for $4.95 a month that lets workers bid on 50 projects per month and list up to 50 skills on their profile. If they want more options, they’ll need to upgrade—which incurs additional fees.
The drawback: To successfully find work or find help, you’ll likely need to pay membership fees and then additional fees to get the resources you need to find exactly what you’re looking for. These costs add up and may get high before you actually start making money or find the exact help you need for any given project. For providers, at times it can take months to complete just one project—creating a lengthy period of paying fees without actually earning any income.
Debilitating Hidden Costs
Platforms with affordable membership fees or commission charges may still have hidden costs. Airbnb, for example, charges a 5 to 15 percent service fee for guests, while Upwork charges a 2.75 percent payment processing fees for clients who buy services on the site. Other common tactics include quote charges and listing charges. Platforms like Thumbtack and Etsy charge users for every service or product they list on the site. Thumbtack also charges for each project quote a provider sends to a client.
The drawback: These hidden fees drive up the costs a user has to pay to use a site. Oftentimes users don’t even realize they exist until it’s too late. For providers, they may have to pay listing prices for products or services that are never actually purchased. For clients, these hidden costs are often factored into the price of a product or service, making prices less affordable.
Online talent platforms offer a range of benefits, making it easy for people to both find job opportunities and find help with various tasks and projects. However, individuals should be aware of the drawbacks.
Humans.net is the only online platform with no commission charges, no membership fees and no hidden costs. This means more earning potential and more affordable services. With fees and charges present on almost all other sites, it’s important to know how much you’ll really be making and how much you’ll really be spending.