Let's talk about how Upwork makes money these days.
I am often seeing 200-300 proposals sent on one single job post. We all are seeing that. But what does that mean?
Let's take the average connect price of sending a proposal to a job as 20. I see higher prices more often but I'll go with 20. A connect is $0.15 so 20 connects is $3. According to this, if a job gets 250 proposals, Upwork earns $750 straight. No expenses. This money alone is what they would earn from a $7500 contract when it was finished (10% platform commissions).
The next thing is the bet- sorry, bids. We are all seeing 300-500 connects being set as bids on these projects. $50-75 range as an extra to get in front of others. Not everyone pays that much of course. Let's assume this scenario:
- the 25% doesn't bid at all: 0 extra
- 25% bids high: 250c * 0.25*250 = 15625 connects => ~$2300 extra
- 50% bids mediocre amounts = 80c * 0.5 * 250 = 10000 connects => $1500 extra
Total money from bids: $3800
Sum of money from application cost and bids = ~$4500
According to this sum, they earn from a single high attraction post the same money they would earn from a $45K contract. Even if nobody gets hired. This money goes straight into Upwork's pockets with no expenses.
Considering this situation, I feel like it is fair for the people to feel this skepticism about Upwork. Is this a necessary situation? Is this a good situation that high connect prices and bid system benefiting everyone? I honestly don't know. But I know that Upwork is making a lot of money with very little effort.