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Table Of Contents  The Online Freelancing Guide
 >  An Analysis and Review of Popular Online Freelancing Marketplace Sites
      >  Elance - Freelance Marketplace Site Analysis and Review

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Elance - Project Discipline Focus
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Elance - Payment Methods and Mechanisms
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Elance - Fees
(Page 3 of 3)

Transaction Fees

Elance charges a standard transaction fee of 8.75% on the total value of all projects completed on the site. This includes standard projects as well as repeat and invite-only projects.

For a while, Elance dropped this to 6.75% for active providers who did over $10,000 in work every six months. That was changed in late 2010, however, so the discounted rate now is based on “relationships”: if a freelancer does more than $10,000 in work for the same client (lifetime total) then they qualify for the lower rate. Few freelancers do that much work for the same client—variety is part of why we freelance—and so this change has not received a very favorable reception among the Elance provider community.

Elance normally takes its transaction fees when payment is made to the contractor using the Elance payment system. Part of the terms of service that Elance users agree to prohibits trying to evade this fee by paying for work outside the Elance system.

Elance provides a way for contractors to try to get clients to pay the transaction fees for a project, but that is really more of an accounting gimmick than anything else. During the bidding process, a calculator is provided that allows the contractor to start with a figure that he or she wants to be paid, compute the fees that allow that as a bottom line, and add them to get an amount to bid to the client. So, for example, if a contractor wants $85 net for a project, then given a transaction fee of 8.75%, the site would tell the contractor to place a bid for $93.15.

That does in fact make the client pay for the transaction fees—but only if the higher bid doesn’t cause the contractor to lose the project! By definition, a contractor who bids this way will effectively be putting himself or herself at a competitive disadvantage compared to one who covers the fees. This can still work well for many providers, but it’s important to remember that there is no free lunch here: a bid for $93.15 is not the same as a bid for $85. You are competing on the basis of your total bid; the client doesn’t really care how much of it you are getting as opposed to Elance.

Withdrawal Fees

Elance does well in this area: it allows several withdrawal options at no charge for its customers. International customers who withdraw funds using Paypal are charged an extra 2.5% for currency conversion.

Other Fees

There are a couple of miscellaneous fees associated with the arbitration process.

If you end up in arbitration over a project gone sour, you’ll be required to pick up a third of the cost of the arbitrator. Your share will be $99 for projects under $1,000, or $199 for projects over $1,000. See the discussion of Elance dispute resolution and arbitration for more details.

Also, under certain circumstances, Elance will deduct a 2.75% fee ($25 minimum) from escrow accounts as part of the dispute resolution process. This seems to only occur if parties do not respond promptly during the process, though; the details are spelled out in Elance’s terms of service.


Previous Topic/Section
Elance - Project Discipline Focus
Previous Page
Pages in Current Topic/Section
12
3
Next Page
Elance - Payment Methods and Mechanisms
Next Topic/Section

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