Which payment scheme is cheaper?

Question

I am long time Upwork (oDesk) user that wants to move to freelancer.com due to the latest shifts in the Upwork pricing policy.

However the pricing system on freelancer.com seems even more complicated. I am reading their Fees and Charges page, and I see that they have multiple fees that apply on different level:

• Under the "For Employers" section you state that the fee is "3% or $3.00 USD (whichever is greater)"
• Under the "For Freelancer" section you state that the fee is "10% or $5.00 USD, whichever is greater"
• Under the "Transaction Fees" section you state that there is an additional fee of "$0.30 USD + 2.3%" for using Credit Card, PayPal or Skrill.

So my question is:

If a client wants to spend $1000 in total with all possible fees included, how much of those would I receive on my freelancer.com profile (without calculating my own withdrawal and bank fees)?

My guess is:

1000 - 0.3 = 999.7 -- transaction fee
999.7 - (999.7*0.023) = 976.7 -- transaction fee
976.7 - (976.7*0.03) = 947.4 -- employer fee
947.4 - (947.4*0.1) = 852.66 -- freelancer fee

Is my math correct? If a client pays $1000, I will receive a $852?

Is there a calculator tool that can help me with this?

Answer 1

Freelancer

Client starts by putting $1000 into freelancer

Fixed transaction:

1000 - 0.3 = 999.7

Percentage transaction:

999.7*100/102.3 = 977.224

977.224 is the bid amount + 13% of fees.

977.224*100/113 = 864.8 is the project bid.

So if the client and you decide on $864.80:

Project Fees:

  $864.80:  what you get
+  $86.48:  freelance fee (10%)
+  $25.944: client fee (3%)
--------------------------
= $977.224

Transaction fees

+ $22.476: percentage (2.3%)
+ $0.3: fixed
= $1000

So you get $864.80 at the end of the day.

Odesk

As a comparison, with odesk's new system (purely for my own interest, since I also use them)

2.75% client payment fee

$1000*100/102.7 = $973.71

freelancer fees:

20% on first $500 = $100
10% on rest       = $ 47.37

total             = $147.37

$973-147.37 = $825.63

So you get $825.63 at the end of the day.

Bottom line:

Freelancer => $864.80  (86.4% of initial amount)
Odesk      => $825.70  (82.5% of initial amount)
Difference => $ 39.10  

---

Bonus points, because I like these kinds of calculations:

When does odesk become cheaper?

As the project size goes up with odesk, the difference decreases until eventually odesk surpasses freelancer. At what point will odesk be cheaper than freelancer?

If we ignore transaction fees for simplicity:

Freelancer's total percentage is 13%. At what point does odesk's scale hit 13%?

The first part of the scale is always $500 => 20%. Let x be the amount above the first $500 of the project.

0.13 = (0.1x + 100) / (x + 500)
rearranging....
x = $1166.

Bid = $1166 + $500 = $1666

For projects above $1666 (including fees), odesk is cheaper than freelancer. For repeat clients, odesk is always cheaper, since the 20% rule doesn't apply.