The expression “race to the bottom” coined by Louis Brandeis generally means that someone is trying to undercut competitors with a lower price for the same product or service. Although the expression targeted nations and companies originally, it is being used widely in the context of modern freelance sites.
It’s mentioned more often on the Upwork Community Forum than most of us would like. Google search with “are freelance sites a race to the bottom” shows about 35 million hits and “is Upwork a race to the bottom?” gives over half a million hits! It’s a popular topic on Quora too.
There are three ways to look at this phenomenon:
- Accept that Upwork and all other freelance sites are indeed a race to the bottom and work for peanuts
- Try to fight the phenomenon somehow without a clear strategy which leads to quitting the whole thing soon
- Challenge the original assumption and make your own way to the top, not the bottom
After getting my things going on the good old Elance site (now Upwork) in 2015 and after coaching talented individuals to freelancer rockstars since 2017, I’ve found that it is the difference in the mindset that makes up the direction of the race.
Many (1.) imagine there is nothing more than survival and the lowest rates always win. This is exactly what the “race to the bottom” means. When competing with ever-lowering prices with all other freelancers globally, there is a good chance that no matter how much you undercut others, someone will always undercut you!
Therefore the “race.”
Some (2.) try just for a few months by claiming to be worth higher prices because of some unsubstantiated claim. Typically, it is the expensive location they live in even though they have the exact same skills as their competitors in less expensive places. Then, quit and complain that the sites such as Upwork are so bad.
The last group (3.), those who don’t accept starting the race to the bottom in the first place, shoot straight to the top. The interesting thing here is why some make it and most don’t!
Those who race to the bottom
The race typically starts at the very beginning (Upwork allows the list price of US$3/h) when not knowing what to do, who to target, or anything else, really. Just write a bad profile, send poorly-targeted proposals, and hope the best. Usually, people who start on this track stay on that miserable track.
This can be verified by looking at the track record of projects completed. There is hardly any progress visible to anyone when you look at the Work History section of their Upwork profiles. Here are some examples.
After a year on Upwork, this freelancer is still struggling to get clients to pay her without conflicts.
It’s the approach.
Here, a person is clearly having trouble in setting a price that is acceptable to his clients. He started at $5/h, going to $10/h at some point, now attempting to get $20/h without being able to level up his list price (still $10/h). Despite all this, he managed to earn over $10,000 and is still Top Rated!
Prognosis: not good. Some clients quit because of low-aiming freelancers. I’ve seen it happen.
This is exactly what the race to the bottom looks like. After almost 200 completed projects, this person is still facing huge daily struggles with every client, only beating others’ proposals by offering a lower price, not finding a sweet spot no matter the effort.
One of the disappointed clients goes as far as mocking the platform because of some issue in working with him. Is doing this kind of work really worth it even if it pays your bills?
Those who race to the top
Fortunately, the wonderful world of freelancing offers a definitive upside too. Is Upwork a race to the bottom, really? When done right, it is the exact opposite. But you have to be very careful, extremely strategic in picking all clients (not just the first couple ones), and you have to do great work, not just good, every single time!
Here is a cybersecurity expert who has no problem charging every client over $100/h, hitting $100K very quickly, and getting great reviews almost every time. Invitations from high-end clients pour on him like rain on a monsoon season, I bet! Quality shows everywhere on this guy’s profile.
A cybersecurity expert totally crushing it on Upwork! Even a little mixup (“feedback has been removed”) won’t shake his profile one bit. His track record still looks great!
Being a freelance software developer and making it globally can seem like a huge challenge. Yet, when getting the approach right, you’ll have no problem consistently charging 3-digit hourly rates to the best kinds of clients. Here’s a lovely example of exactly that: an experienced software developer/designer made over half a million on Upwork.
A software developer with design skills appears to be able to do two people’s jobs. Therefore, her rate is double and it is still a good deal for the client.
Once you get to the 3-digit rates, you can just keep going. This startup consultant has been charging $250/h since March 2020 and has clearly landed the sweet spot in terms of clientele and rates. He has 25 jobs in progress, all with the same hourly rate, so I’d say he raced to the top and made it there!
A startup consultant charging $250/h for almost two years in a row. You’d love to see that $$$, wouldn’t you? 😉
An important thing to note in these examples is that none of the freelancers I picked as examples here are associated with agencies. This is all individual work for fantastic Upwork clients. Real people, real talent, real business. It can be done.
As you can see, it is not so much about what you do (as the good examples here come from different fields), but it is all about how you do it. Do you know your worth? Can you take a risk of not working for anyone else than the best possible clients, even if it meant no business at all for a while?
Does your track record build up or does it look like a random pile of odd jobs? Are you brave enough to set ambitious goals for yourself or settle for aiming at the same as everyone else?
It’s the mindset that makes the difference together with the skills and the value that they bring to the client. Go for something critical to the client’s business rather than niceties or mere cost-savings.
It’s all about what your unique combination of skills can do for your clients. (Read more about the role of expertise in freelance business here: Freelancing – It’s an Expert’s Game.)
My own race: Is Upwork worth it?
When I joined Elance, back in the days, I wasn’t sure about how things would go. Yet, the clientele I targeted was brilliant and realistic from the start, and I spend hardly any time sending proposals and struggling like almost all others struggle at the beginning.
The other factor was that from the start I decided to build multiple sales channels, so I never depended on just Elance or Upwork, which I think was the most brilliant part of my plan. This is why I never needed to start from the bottom or take work out of desperation.
My story is described in detail here: How to Start Freelancing and Make It to the Global Top – My First Year on Upwork. A small addition to that story is a short analysis of the hourly rate that I yanked up little by little, quite conservatively, actually.
Here is how it went. (My work history of well over $100,000 total earnings is only 3 pages, but I clipped it and inverted the order here for better readability. You can see the full list on my profile.)
My first project was a small development project for $30/h, the second one a simple consulting gig for $300 bucks. Not huge, but no low-balling either!
Most seem to start with a $5 job, but I managed to avoid that fate by patiently waiting for the right opportunity to appear.
The next projects got me past the first $10,000 total earnings.
I then had one good project for $8,000 that got me past $10,000 total earnings after which, coincidentally, Elance turned into Upwork in December 2015. But I kept saying ‘no’ until May 2016 because of getting good business through other sales channels, so I didn’t do any projects on the fresh new Upwork platform for almost over 6 months.
2016-2017 were crazy as clients old and new were after my services.
The next two years were really crazy! I raised the rate to $55/h, $66/h, and $77/h almost project by project. This was the time when earning $10,000 per month became normal. I also had $88/h and $99/h on my profile at some point but didn’t start any hourly projects with those rates.
In 2019 I went to 3-digit hourly rates for good.
Since November 2019 I started focusing on lightweight consulting work because I had too many software development projects from other channels. For this type of work, it is easy to charge high rates because the impact on the client’s business is critical.
In 2021, I took a step toward doing patenting and other IP-related consultancy and advisory work.
The final hit was to go for even more complicated consulting and advisory services which enabled me to add another $100 to the hourly rate.
Where this is going, with a strong strategically built profile and track record, is obvious: there is no limit once you make it to the top! The only limit will be your own aspiration and what you actually want to do with the remaining time when your bills can be paid with just a couple of hours of work a month.
To me, this is what ‘free’ in ‘freelancer’ means! Free to choose. Free to pick your own focus just as you like, which could include, for instance:
- Finding even better clients
- Testing new sales channels
- Improving the value of your work to your clients
- Developing your business to be more scalable
- Increasing your visibility within your niche
- Learning new skills that you didn’t have time for earlier
- Investing
- Mentoring, coaching, and educating others
- Doing pro bono work just because you can
- Eating coconuts
- Sitting on a beach watching the sunset
- Etc.
Is Upwork a race to the bottom? No, it’s a race to the top!
This question comes back to the mindset of the freelancer. It’s your choice to race to the bottom or to the top! For sure, the race to the top takes a longer time as you need to choose your clients very carefully and sometimes wait for the best opportunities when the second-best doesn’t do anymore.
Sure, you can focus on doing work just like others on Upwork, charging the same as everyone else, and feel some kind of stability as a reward, maybe. Perhaps you’d always have some business going on so that your baseline income never needs to be a flat $0 for too long. But is Upwork worth it, really, if you only achieve survival?
Or you take a little bit of risk and build a high-value business where the stability is not even a variable anymore. Instead, it’s a bonus that comes from great work done with the true prize being maximal freedom to pursue your own interests.
Ready to reach the top now?
If you’re a quick study and learn well by reading, go through the CoachLancer articles that I structured for your convenience on the Upwork Course page. There’s well enough insight, winning strategies, examples, typical mistakes, and guides for most people to make it on their own.
But if you need personal help and one-on-one coaching, feel free to subscribe to CoachLancer Hotline and I will do whatever I can to get your business going.
What is “hot” about CoachLancer Hotline? Your future freelance business! 😉
