If you look up the dictionary description of “Freelance” what you will find is this “work independently and on temporary contracts rather than for a long-term employer“. Digging a bit further you will find that “Independently” means “Not determined or influenced by someone or something else; not contingent“. A “Marketplace” is defined as “the world of commercial activity where goods and services are bought and sold“. Going further, “Bid” is defined as “An offer or proposal of a price“. “Independent Contractor” is defined as “A taxpayer who contracts to do work according to his own methods and who is not subject to control except as to the results of such work.“. Why are these definitions important? They are important because they are at the heart of why it is not a good idea for freelance professionals to insist that Freelance Marketplace Bid site set “minimum wages”. Freelance marketplaces basically provide a market where a freelance professional can bid on assignments that they can fulfill as an independent contractor.
Here is a scenario that I believe will help drive home the point of why it is a bad idea for freelance marketplaces to set specific rates for tasks. Since I am a writer, I will use the scenario from a writers perspective, but I am certain with a bit of imagination you can convert this to any freelance scenario.
Scenario One: XYZ Freelance is a marketplace that has a minimum rate established of $10 per hour for all freelance writers. Freelance writers are guaranteed this rate and clients cannot hire them below this rate. Freelance writers are free to bid higher, but not lower.
Buyer is interested in having three five hundred word articles written. Proper English must be used and all articles must pass CopyScape. Here are the bids that have been received:
Freelance writer one: I am a brand new freelance writer with a limited portfolio. I can write your three articles in three hours and guarantee that they will be error free. My rate is $10 per hour.
Freelance writer two: I have experience as a freelance writer and my portfolio will clearly show that the topic you are requesting will be well researched, well written and error free. I can write all three of your articles in three hours and will make edits as needed to ensure they meet your needs. My rate is $15 per hour.
Freelance writer three: As an experienced freelance writer, I can provide you with three articles on these three topics within three hours as you requested. You can see samples of articles in this genre in my portfolio. Articles will be written in compliance with SEO techniques and with proper English. My rate is $25 per hour.
Freelance writer four: I am an experienced freelance writer and I have excellent editing skills. You will find that the articles I write are properly optimized for search engines, use proper English and do not require editing. I estimate it will take me approximately three hours to do all three articles. I guarantee the quality of my work. My rate for this assignment would be $12 per hour.
The common factor here is that all four writers are willing to spend 3 hours to provide three articles. The financial breakdown is like this:
- Writer one: 3 hours X 10 per hour = $30
- Writer two: 3 hours X 15 per hour = $45
- Writer three: 3 hours X 25 per hour = $75
- Writer four: 3 hours X 12 per hour = $36
Since the timing is the same, and all four are backing up the quality of their writing, I am going to hire the writer who is charging $12 per hour. Since this writer also is an editor, it is more unlikely that I will have to have the articles re-written for language. For just a moment assume that I need three articles written weekly for one year. Over a year this means that I need to pay for three hours of work per week, or 156 hours. Should I elect to go with the new writer (e.g. $10 per hour) I may actually get better quality work initially as they “have something to prove”. I would never hire the more experienced writer (e.g. $25 per hour) for a couple of reasons (a) they no longer have anything to prove and (b) they will simply cost me too much over the year (e.g. $3,900) when compared to the $12 per hour writer (e.g. $1,872). In point of fact, I can increase the $12 writer quarterly by $1.00 per hour and still come out ahead ($12, $13, $14, $15) in the long run – in this scenario it would cost me $2,106 for the year which is still substantially less than $3900.
It is not about competition
Some people think that “high earning” freelancers do not want to see minimum rates set because it would “tilt” competition against the higher bidding freelance writers and skew it to the lower earning writers. This is simply not true. Most freelance writers who are able to bid high and win assignments do so because they are looking for specific types of assignments and clients. These are often “niche” topics or longer term assignments. In addition, those who charge higher rates typically are not bidding on jobs on a regular basis. If you review most freelance sites where you have higher paid freelancers what you will almost always find is that these are the same people that have multiple streams of income. It is not about being “afraid” of their competition!
Summary
If you are depending on freelance marketplace bidding for your primary source of income, it may be time that you reconsider your commitment to running your own business if you think they should be establishing minimum rates. Minimum rates are set for those who work for someone else. You are working for yourself – it’s up to you to decide what your minimum rate is going to be. Unless you are working “for” a freelance marketplace bidding site, you are not entitled to wage protection.
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About Doreen Martel
Well-rounded freelance writer who contributes to various blogs, paid to write sites and revenue sharing sites. Doreen is legally blind and has worked at home for more than 10 years. She uses the lessons learned from this experience to enhance her writing and share information with others.
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I agree that the current online freelance marketplaces aren’t designed in favour of freelancers (most of the time). For certain type of tasks, it is often a pricing competition because the portfolios become all equal.
I am trying to build a different kind of freelance marketplace that values creativity over pricing. Also, because it is the freelancers who list their services as opposed to clients who post their projects, there is a shift in people’s mind. You tend not to for the cheapest (because it is not as obvious anymore) but you look for what the service you are after and if the associated price is fair, you will buy it.
The platform is called TaskArmy (http://taskarmy.com) and I would be interested to hear your opinion about this “twist” in the freelance marketplace world.
Thanks
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