Estimated reading time: 5 mins
Freelance Marketplaces, like Elance and Rentacoder, have grown very popular with freelancers and their clients because they are a ‘platform solution’ to many freelancer business problems. For a small(ish) fee, freelancers enjoy many benefits. What are they, and why use these platforms?
You might already be familiar with these platforms, and use them regularly. If that isn’t the case, then are you not wondering yet why you don’t get as much work as you would like?
The Power of the Freelancer Marketplaces
Freelancer Marketplaces connect buyers of work with providers of work. Simple really. What they do is provide an exchange where buyers post jobs with a specification of the work, and then providers bid for that work, followed by the buyer’s selection of the provider who has offered the best price or deliverable but also with credibility. These platforms provide a commercial process that manages the flow of information, requests, proposals, bids, payments and feedback, making it really easy to do business.
Here are the 10 big reasons why you should use a Freelancer Marketplace as a freelancer:
- Access to a massive project portfolio– the number of leads available are considerably larger than any single freelancer could generate on their own. At the time of writing, there have been almost 22,000 jobs posted on Elance in the last 30 days.
- Buyer vetting – if you’re providing services based on a relationship and trust alone, how do you know you’re not going to be ripped off? With these platforms, you can learn about your buyers before bidding for jobs. This means you can check out buyer’s credibility (just like buyers check you out). I think the most important things to look at is the buyer’s project award rate (how many projects they actually award against posting), their purchase value (the higher the value, the greater the commitment by the buyer) and most of all, feedback left by other providers. This is a two-way street.
- Connectivity– buyers and providers are connected to each other just like people are in Facebook or LinkedIn. No need for phone books, search engines, or anything like that. The whole market is brought together in one place.
- Quickly Paid Bills– one of the best features of these platforms is their ‘escrow’ services, which means you should never be ripped off again by buyers who don’t pay. Why? Well, using the escrow service means that the buyer must already pre-fund your work before you start. The money is held by the platform, and then released to you once you complete the work. So, you’ll always know that your client has the funds before you get working.
- Free Marketing– these platforms offer you free marketing through your profile. Your profile typically shows your track record, customer ratings, number of repeat customers, etc. and the best thing of all is that the data is provided by a 3rd party – Elance, Rentacoder, etc – so it is trustworthy. You only pay for marketing at the point you are paid for the work you provide.
- Project Tracking – the platforms typically provide project tracking through the use of ‘milestones’ (major events in the project, such as start and end), and they support the sharing an storage of documents relevant to the project.
- Payment Collection & Processing– payment is collected through the platform through your PayPal account (or credit card). And all payments are in $USD, no matter where the work gets done
- Terms of business – freelancers working outside of these platforms need to ensure they are protected by a terms of business. The platforms provide these automatically and also manage the process of finalization and acceptance.
- Feedback – buyers can (and should be encouraged to) leave feedback for their providers. It’s a satisfaction rating that is recorded against the provider’s profile and forms part of the free marketing benefits of the platforms.
- Standardization – the commercial process of ‘provision’ is fully managed to the platform’s standard, so that means you use the same process for every client you work with in the marketplace. This allows you to optimize your own ‘workflow’, saving you bags of time which means more cash in the bank.
Elance is the platform of choice for me as it offers the widest variety and volume of jobs, from programming to admin, and it is the slickest site of all. Fees vary from 4% – 6% of job value(so make sure you incorporate this into your pricing and commercial considerations) and there is an additional 2.75% feeif you use their payment processing. These costs are likely to be clawed back by a reduction in marketing costs, efficiencies and no lost interest due to late payments. There is an easy admissions test, yet the sign up process is straightforward and quick to complete. So far, Elance has enabled over $135m USD of work since 2005!
Rentacoder comes from a more IT developer stable and has over 100,000 registered buyers and over 230,000 registered coders. The kind of jobs that appear on Rentacoder are wider than just programming jobs (such as writing) although it’s branding is still on the geeky side.
Other Uses of Freelancer Marketplaces
There are other uses of Freelancer Marketplaces other than what’s stated above. Because they are platforms for conducting business through a repeatable commercial process, I strongly suggest that you conduct all your business through them, even on jobs you have found and agreed outside of the platform. Why? Well here are two good reasons:
- You can exploit the escrow services for your work to ensure your supplier can pay you, and that their are arbitration processes should their be a dispute.
- You will gain recognition and build your profile for this work, even if you and your customer didn’t find each other through the platform. This way, you’re building up your portfolio as a basis of credibility when you bid for work with other buyers.
In addition, you can use these platforms to benchmark your rates and services against other providers in the market, even if you don’t do business through the platform. Chances are, your customers will be looking there too, so don’t bury your head in the sand.
These platforms can support fixed-cost projects, as well as jobs based on time and materials. Whatever job you do, see if these platforms can be used to manage the commercial process.
Flip the model – use these platforms to outsource work if you can personally apply your time to higher value work. For example, outsource admin, submissions, writing, etc.
Freelancer marketplaces offer great benefits for a small fee. If you can make the price you pay work for you (by saving you time, lost revenue or increased efficiency) then they come highly recommended. They’re free to sign up – what have you got to lose?
See what’s happening at Elance here.
Check out Rentacoder here.