How to Build a Freelance Marketplace like Fiverr and Upwork


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The gig economy has rapidly gained a wider currency in a matter of few years. Studies reveal that around 34% of the US workforce was already into the gig economy even before the pandemic started and is projected to reach 50.9% by 2027. With its low barriers to entry, greater efficiency in matching workers with job opportunities, and a whole lot of other reasons, its popularity has grown considerably.

Moreover, it is one of the very few economies that not only remained unaffected during the pandemic but also grew rapidly. Post-pandemic analysis has made it very clear that the employees hardly want to return to their 9-5 office schedule.

This mushroom growth of the gig economy has resulted in the emergence and rapid expansion of freelance marketplaces like Fiverr and Upwork. Reports show that more than 70% of all freelancers find projects through freelance marketplaces.

What is a Freelance Marketplace & How Does it Work?

A freelance marketplace is an online platform where service providers hire freelancers for remote jobs. These platforms provide a safe and convenient way for service providers to hire freelancers for impermanent job roles and projects. The freelance marketplace bridges the gap between – service providers looking to hire talent and freelancers looking for job opportunities.

The workflow of both the entities is explained below:

For Businesses/Service Provider

  • Initially, service providers start off by signing up on the marketplace and posting job requirements.
  • The marketplaces use big data algorithms to analyze the job requirements and provide a list of potential freelancers registered on the platform. In a bidding-based marketplace, the service provider will see a list of all the bids received on the posted job.
  • The service providers then compare the skills, prices, expertise, and previous reviews of the suggested freelancers and select the one that best fits their requirements and budget.
  • Upon task/project completion, the service providers then make the payment to the freelancers either as per a fixed-price or hourly rates, depending on whichever is mutually decided beforehand.

For Freelancers

  • Prior to creating an account on the marketplace, freelancers are screened through a series of tests and background verification.
  • Depending on the skills and expertise, the profiles of freelancers are recommended to the service providers searching for job seekers. Freelancers can also search for job postings and apply/bid if their skills match the requirements.
  • After completing the job, freelancers receive payments that are based on hourly rates or the milestones agreed upon earlier.

Why are Freelance Marketplaces Like Fiverr and Upwork so Popular?

The growing popularity of these marketplaces reflects that this business is the most sought-after in present times. Here is the presentation of the annual revenue of the top freelance marketplaces operating online:

These numbers clearly show that there has never been a better time to launch a freelance marketplace. Let’s have a look at some of the reasons for its booming popularity.

  • These marketplaces enable service providers to hire skilled and top professionals from across the globe without spending much.
  • Hiring on freelance marketplaces is always on-demand, i.e. there is no long-term commitment, and service providers can anytime terminate the contract with the freelancers once the job is done.
  • With low entry barriers, skilled professionals can start their career journey even with no previous experience.
  • Full-time employees can also work on freelance marketplaces for extra sources of income and enhance their skills.
  • It also gives the flexibility to strike a work-life balance and work as one’s schedule allows.

Owing to all these and many other reasons, freelance marketplaces are becoming ever more popular.

Future Scope of Freelance Marketplaces

As we see the huge increments in the freelancing statistics, the future of freelancing is certainly rich. The technology is developing constantly which has already transformed the freelancing concept as one of the most emerging and growing marketplaces. Getting down to brass tacks:

  • Generation Z and millennials prefer flexibility instead of working for 9-6 jobs. A significant portion of the workforce is already drifting towards freelancing.
  • More than 50% of mid to large-sized enterprises demonstrate an increased demand for a contingent workforce.
  • The total number of projects outsourced to freelancers is expanding by 20% each quarter.

Not just North America, the trend of freelance marketplaces is also growing quickly in Asia, Europe, and other parts around the world. All these trends indicate a boom for the online freelance economy. Now is the ideal time for entrepreneurs and investors to initiate their freelance marketplace business.

Laying The Foundation- Building a Freelance Marketplace

While there are some well-known freelance marketplaces like Upwork and Fiverr, there is certainly enough room for new emerging platforms. However, to gain a competitive edge, the business owner should be well-versed with the essential features, monetization strategies, estimated cost, and many other things.

Essential Features of a Freelance Marketplace

Here are some common features that must be included in every freelance marketplace.

User Profile: The users on the freelance marketplace should be able to create their profiles. The user profiles will showcase their user type – freelancer or service providers. Freelancer’s information like photo, bio, skills, experience, price, certifications (if any) is saved in this section. Service providers can also add their information like photos, available projects/tasks with them, budget, location, etc.

Advanced Search:
This is one of the main and essential features of any marketplace. A freelance marketplace should have robust search and filtering to allow users to easily navigate the website and search the freelancers and projects/tasks they are interested in without any hassle. Users can use different search filters like specialty, skills, price, domain, etc. to make the browsing process quick.

Multiple Payment Option: As the marketplace is responsible for handling the transactions between freelancers and service providers, having an escrow payment option is an ideal alternative. In addition to this, offering multiple payment modes such as credit/debit cards, internet banking, local payment cards, etc. by integrating payment gateways in the marketplace allows users to complete their online transactions without any hassle.

Built-in Messenger: Many times the service providers may want to discuss specific project details, clarify the requirements, work conditions, etc. with the freelancers before the initiation of the project. Some service providers may even want to stay in touch with the freelancers during the task for regular updates and progress on the tasks.

This requires a reliable communication tool where freelancers and service providers can maintain contact by sending text messages and sharing files.

Reviews: Having a clear and transparent review/rating system on your platform builds the trust of users on the platform. The number of completed projects, satisfaction rate, feedback, and similar information can help other service providers to make an informed decision while hiring freelancers for their tasks.

Monetization Strategies of a Freelance Marketplace

Deciding on a proper revenue model for your freelance marketplace is crucial before actually launching the marketplace. Let’s take a look at the possible revenue streams of a freelance marketplace.

Commission Model: This is one of the most popular revenue channels of a freelance marketplace. Platform owners can charge a fee from freelancers for every earning from the platform. The service fee can be a flat fee, a percentage-based fee, or both. For instance, Upwork charges 5-20% of the freelancer’s earnings whereas, in the case of Fiverr, it is 10% of the price of the purchase above $10.

Subscription Model: Believed as the best for online marketplaces, the subscription model enables platform owners to generate regular monthly, quarterly, or yearly revenue. The users pay a fixed amount to use the marketplace’s services. It is recommended to have multiple subscription plans having a varying set of featured services. For example, Upwork offers 3 subscription plans – $49.99, $499, and an enterprise plan based on requirements.

Sponsored Model: As an additional source of income, platform owners can offer to highlight the profiles of the freelancers at the top of the list for an extra fee. This allows freelancers to get extra exposure and get extra projects/tasks. This revenue stream is widely used by many online marketplaces. The charges for this service may vary depending upon the frequency of a given skill, promotion period, and positioning of the listing on the website.

Banner Ads: Just like the sponsored model, platform owners can also display ads of third-party companies who wish to advertise through your freelance marketplace. Advertising models like CPI (Cost Per Install), PPC (Pay Per Click), CPC (Cost Per Click), or CPP (Cost Per Point) can be used. In addition to this, ad software like Google AdSense can also be used for ad placement.

Transaction/Processing Fees: In this revenue channel, a small fee is charged for every financial transaction (membership, vendor earnings, advertising, listing) that takes place on the marketplace. While an additional processing fee may be disfavorable to some users, the platform owner can look to justify the cost through value offerings such as added security, highly-screened profiles, work satisfaction rate, and so on.

Challenges of a Freelance Marketplace and How to Overcome Them

Even though freelance marketplaces have gained immense popularity, there are still a few challenges that need to be addressed. Factors like finding new clients/projects, simplifying communication, streamlining payment processes, etc, need to be looked after to take the efficiency of these marketplaces to a whole new level.
Below discussed are some common challenges and tips on how to overcome these challenges with your freelance marketplace.

Matching Employers With Employees: Finding the right resources for a given requirement and vice versa can be a cumbersome task. Often, a CV/JD alone isn’t enough to match freelancers and service providers. AI (Artificial Intelligence) and ML (Machine Learning) featured algorithms are required to pry deeper and analyze the users’ search queries, behavior, and preferences to find the ideal candidate.

These algorithms take various factors such as skills, expertise, location, price, reviews, etc. into consideration and show closest matching results.

Cost Estimator: To estimate someone’s efforts on a particular task and figure out the price to be paid is a challenging task. Cost estimation becomes more difficult for a freelancer who is a newcomer to the industry. An ML-based algorithm can compare a project’s complexity, timeframe, job volume and come up with the optimal cost to help overcome this challenge.

Improve Communication: One of the major challenges of working remotely is communication. Usually, the freelance marketplaces have text-based communication which often leads to inconvenience like slow responses, miscommunication, too much hassle, etc. Video/voice calls within the platform, recording calls, screen sharing will make the communication seamless, clear, and simple.

Estimated Cost to Build a Freelance Marketplace like Fiverr and Upwork

The cost to build a freelance marketplace entirely depends upon the approach used to build the marketplace. There are two common approaches to build a marketplace:

  • Readymade Software
  • Custom Built from Scratch

Readymade Software: This is an instant solution when you plan to start your freelance marketplace. A readymade software is a well-developed software that has undergone rigorous testing by skilled developers to help launch a marketplace without any complications. The software is pretty customizable and can be tailored to meet the general requirements of a large number of businesses.

Many software providers also offer free demos to give an idea of the basic features of the product. The readymade software comes with a fixed price which is a one-time payment.

Custom Built: Building the software from scratch needs a dedicated team of skilled developers and a huge investment. In addition to this, a whole lot of patience and time is required as it can take months to be completed. Although the custom-built software is built to the specific requirements of the business, it is more vulnerable to bugs and errors which will be fixed over time as the software matures.

Coming to the cost of both the solutions, readymade software generally cost low when compared to a custom-built product. The reason being, the off-the-shelf software are sold as a product to multiple clients, while custom solutions are developed specifically for a client and cannot be resold to others.

Still, the question remains – what is the estimated cost to build a freelance marketplace? Well, if you are thinking of developing a freelance marketplace from scratch, the estimated cost would be around $5,000-$40,000 depending upon the complexity, features, and region where you hire the developers. Whereas, a full-fledged readymade software can cost you around $1000-$2000.

Final Words

Building a freelance marketplace like Upwork or Fiverr does not have to be difficult. Identify your niche, determine the USPs, and choose the best approach to launch your marketplace. Make sure to garner support from industry experts to guide you through the process. We hope this detailed guide helped in answering most of the questions.

Vinod Janapala
Vinod Janapala - Product (SaaS) Marketing & Customer Analytics Lead. Vinod is keen on such topics as Marketing, Customer Experience, SaaS Challenges, and Personal Growth.


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