Are you paying the Elance or oDesk fees? I haven’t paid these freelancer site fees for a long time. However, the other day I was talking with someone new to outsourcing and they were under the impression that they had to pay these fees. They had no idea these fees could be negotiated with your freelancer. It seems that most freelancers are using this technique on new comers. They talk with you and negotiate a price for a project and then when they send their bid through the site it’s about 10% higher. Then they tell you “These are the site fees and you must pay them.” If you’re new, you may believe it and just pay the fees. If you’ve done this a few times then you know how to get out of it. Here’s how I do it…
When I put a job posting out I get a ton of bids. I go through them and pick the ones I like. Then I interview them and negotiate down my cost. Once I have the cost nice and low I always get hit with the same comment “You’ll cover the Elance/oDesk fees right?” This is where I say No. Then they come back with “But this money is not for me. It is to cover the Elance/oDesk tax and fees.” Well, boo hoo! This is where you lay the hammer down and start using the tips provided in my previous article.
“Sorry, my business partner only approved this much. The extra 10% goes beyond our budget.” or “There is another bid for the same work and the dev has offered to cover the oDesk fees. If you can cover the oDesk fees I’d still love to give you this project.”
This works. Trust me.
Quick Tip: Don’t tell the freelancer that you expect them to pay the Elance/oDesk fees early in your negotiations. If you do, they will be adding 10% to every bid they give you. Let them think whatever they want. Then when you’re at the end of your negotiations you can make them aware of the fact that they will cover these fees.
Here’s an overview of how these top freelance sites work. They’re not all the same so it can get a bit confusing.
If someone sends you a Bid the number you see is auto inflated by 8.75% to cover the Elance fees.
Avoid the Fee: Don’t accept any bids. When you’re ready to hire someone you simply go to the freelancers account page and click “Hire Me”. You can bypass their bid like this and just hire them at a Fixed Cost. When you hire someone at a Fixed Cost the 8.75% will come out of that fixed cost and the freelance will take the hit.
oDesk is different because they expect the freelancer to cover the fees by default. So when a freelancer on oDesk places a bid they have already done the math and inflated their pricing by 10% because they know that oDesk will keep 10%.
Avoid the Fee: Don’t accept any bids. After all you know they’re at least 10% high. Negotiate with your freelancer and when you come to a price you can just hire them from their profile page.
Notable Note: You may think that the freelancer is well aware of these fees and he’s always padding his price during the negotiation process. This is not the case. During the negotiation process it’s highly likely that these fees will be overlooked. It’s only at the end of the negotiation process that they are remembered. By then it’s too late. The freelancer has give you a lower price and if you’re smart about it they won’t be able to bump it back up to cover the fees.
Ok, so you’ve found the perfect dev for your project. You really like this guy but he’s not budging on this “fee” issue. This happens now and again. In some cases the freelancer really is worth that extra 10%. That doesn’t mean you should just give it to them with no strings attached. Use this opportunity to get some more bang for your buck.
“Ok, how about this. If you can deliver my project 1 day early and free of bugs I will gladly give you a 10% bonus on the project. This will help you cover the cost of those fees.”
You’ve now taken this stupid service fee and turned it into a carrot to dangle in front of your freelancer. They will work harder and faster for you now.
I hope this helps you reduce your outsourcing costs and I hope that last fee you paid was the last one you’ll ever pay.
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Also - have you used this advice? How did you get on?! Let me know in the comments
P.S. I’m getting ready to release a new premium training course that I’m really excited about. More details soon…!