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Cost Comparison for the Big Five Online Freelance Marketplace Sites
(Page 4 of 5)
For each of the scenarios, I computed
costs in these areas:
- Membership and Category Fees: These are
fixed costs that are charged each month regardless of volume.
- Bidding and Premium Placement Fees: This
extra cost is only applicable to Elance, at least at the bidding rates
I’ve assumed in my current scenarios.
- Transaction Fees: These are the transaction
fees for work performed, computed using each site’s stated percentages.
For Guru, I assumed all funds were deposited via credit card, incurring
the extra 3% fee on top of its nominal 5% or 10%. For Elance, I used
8.75% in all scenarios, except for 6.75% for 10% of the work done in
the high volume “Advanced” scenario (again, an arbitrary
choice). For vWorker, I used 15% for all bid work and 12.5% for repeat
- Other Fees: At the present time, this is
just the fees associated with making withdrawals.
- Escrow Fees, Arbitration Fees or Losses Due
to Uncollectible Revenues: This includes costs for using escrow services
or arbitration, and in the absence of either, the approximate cost associated
with losing payment for work performed.
The final item in that list deserves
more explanation in terms of how it applies to the various sites:
- vWorker: This amount is zero, since that
site has an excellent arbitration system included for free.
- Guru: This value is 2% of the monthly volume
on the site for the scenario, since that’s what they charge for
- Freelancer.com: Here, I used the site’s
$10 flat minimum cost for arbitration applied to the average number of
- Elance: For Elance I similarly figured
out how many projects were likely to go into dispute and then charged
$99 for each one, except in the Advanced category, where I used a weighted
average assuming 80% small projects ($99 arbitration fee) and 20% larger
projects ($199 arbitration fee). (If anything, I am being somewhat generous
to Elance here, as in practice many people just “eat” unpaid
projects rather than going through a third party arbitration process.)
- oDesk: In this case, the final cost line
is equal to 5% of the monthly billing volume for the site. oDesk has
no escrow or arbitration service for flat rate work, so any work a client
refuses to pay for is lost.
I realize that this is probably the
most controversial of the my choices in this model, but as I see it,
these are real, hidden costs that need to be taken into account for a
comparison to be fair. If anything, the 5% figure is arguably conservative.
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Last Site Update: October 21, 2011
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