When a business owner and an engineer find each other on a platform like Upwork, both of them pay for it. Not once. Every year the work continues. And if they ever want to make the relationship direct, the platform charges them to walk out the door. I want to put real numbers on that, because most people only feel the cut on their own side and never add up both.
Both sides are paying, every year
There are two fees running at the same time on the same contract. The client pays a 5% Marketplace fee on everything they pay the freelancer, discounted to 3% only for US clients paying from a checking account (Upwork). The freelancer pays a service fee that, since May 1, 2025, is no longer a flat 10% but a variable 0% to 15% set per contract, with most freelancers landing near 10% (Upwork).
So on a typical contract the platform takes roughly 15% of the work value, split across both sides, and it takes that cut again every year the engagement runs. Here is what that adds up to at full-time hours, using 2,080 hours a year.
| Hourly rate | Billed / year | Both-side fees / year | 1 year | 2 years | 3 years |
|---|---|---|---|---|---|
| $25 | $52,000 | $7,800 | $7,800 | $15,600 | $23,400 |
| $40 | $83,200 | $12,480 | $12,480 | $24,960 | $37,440 |
| $60 | $124,800 | $18,720 | $18,720 | $37,440 | $56,160 |
| $80 | $166,400 | $24,960 | $24,960 | $49,920 | $74,880 |
| $100 | $208,000 | $31,200 | $31,200 | $62,400 | $93,600 |
Both-side fees use 10% on the freelancer plus 5% on the client. The freelancer side ranges from 0% to 15% by contract, and the client side drops to 3% for US checking-account payments, so the real figure moves with your terms. The point is not the exact percent. It is that the meter never stops.
A client and a $60/hr engineer who work well together for three years send the platform about $56,000 over that span. Not for finding each other once. For continuing to work together.
And it costs to leave
Say the two of them decide the platform is no longer adding anything and they want to make the relationship direct. There is a fee for that too. On hourly contracts, Upwork takes the highest hourly rate on the contract, multiplies it by 2,080 hours, and charges 13.5% of that as a Conversion Fee (Upwork).
| Highest hourly rate | Annual basis (2,080 hrs) | Conversion fee (13.5%) |
|---|---|---|
| $25 | $52,000 | $7,020 |
| $40 | $83,200 | $11,232 |
| $60 | $124,800 | $16,848 |
| $80 | $166,400 | $22,464 |
| $100 | $208,000 | $28,080 |
In fairness, this fee is discounted once the contract is more than two years old, and the discount grows with how much you have already paid in Marketplace fees. So the buyout mostly bites in the first two years, which is exactly when a new working relationship is most likely to want to go direct.
Stack the two together and the shape is clear. To keep working with someone you already trust, you pay a yearly cut from both sides. To stop paying that cut, you pay a lump sum up front. The relationship was never yours.
What we do instead
At Neunsoft we handle the legal setup both sides actually need to work together directly: the entity, the contract, the IP assignment, the payment rails. We know what each party has to have in place, US side and abroad, and we set it up correctly. We charge once. After that the relationship is yours, forever.
No annual percentage. No fee to keep working together. No fee to leave, because there is nothing to leave. You and the person you build with own the relationship outright, the way it should have been from the start.
If you have someone you already want to work with, or want us to help you find them, we can set the whole thing up the right way.
Talk to us