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eLance Has Taken the "Free" Out of Freelancing
By Loralei Walker

As of April 26, 2001, bidding for projects on the eLance marketplace was no longer free for service providers. Founded in 1999, eLance has strategically formed partnerships with the likes of Internet giants eBay and Corel, making it the largest marketplace on the Net that brings together clients and their service providers. And as you know, fame has its price. Only this time, the price is to be paid by those using the eLance marketplace to find work.

There are now two categories of service providers on eLance; there is the Basic Service Provider, and the Select Service Provider. The difference lies not in the amount of experience, nor the quality of service provided. Instead, it is based upon what the service provider is willing to pay eLance for the privilege of bidding for work.

The Basic Service Provider status costs $25 USD per month, and this allows you to bid on all "basic" projects-- projects that are open to select providers as well. They may not, however, bid on projects reserved solely for the Select Service Providers. After paying this fee, if you are lucky enough to find work, you must then pay 10% of what you have charged the buyer, with a minimum charge of $10, regardless of what you get paid. Therefore, if you are awarded a project for which you have charged the client $35, you would have recouped the cost of one month’s subscription to eLance, and the other $10 would go to eLance as a transaction fee. In other words, you have not yet made any money.

The Select Service Provider pays anywhere from $40-150 USD monthly for the chance to bid; it costs even more if they choose to purchase the select status in more than one category. Select Service Providers may bid on all projects listed on the marketplace. However, a Select Service Provider only retains the select status in the field or fields for which they have paid, and is regarded as a Basic Service Provider in all other fields. The transaction fee for the Select status is 7% of the amount paid to the service provider, again with the minimum being $10.

The most unfair thing about implementing the subscription rates, is that before eLance mentioned anything about charging freelancers across the board, they invented the Select Provider status. All bidders received notice of this new category via email, and all were offered the chance to become a Select Service Provider for the "low cost" of $25 USD a month. And nobody was told that eventually, everyone bidding on eLance would have to pay at least that much. That means that while some eLancers are paying the $25 per month just to retain their Basic Provider Status, others out there are paying the same for the Select status, just for jumping on the bandwagon early.

Although eLance does offer discounts to service providers who purchase either a quarterly or a yearly term, the discounts are minimal, and do not reflect any substantial reward for committing your time and a portion of your income to eLance. Nor can eLance guarantee that you will recover what you have paid to subscribe as a service provider.

Unlike one of its major competitors, Guru.com, eLance does not charge buyers to list their projects. In short, the people who really have the money to spend actually spend less than us starving writers, and risk losing nothing. They post their project, and at the end of the bidding period, they either hire someone, or they don’t. Guru, on the other hand, does not charge the people out there pounding the virtual pavement looking for work. When a match is made between a service provider and a buyer, Guru then charges the buyer a fee for listing the project on their site. This policy in itself makes Guru.com a freelancer-friendly site.

One thing eLance does provide however, is a discussion board open to all eLancers, namely, the Water Cooler. At last glance, the Water Cooler held more than 1,000 complaints about the new tactics, terms and conditions eLance is choosing to implement, as well as many freelancers bidding their farewells.

When I was contacted by one of eLance’s representatives regarding whether or not I would be subscribing, I was given some information on the cost of running their site. While I questioned what the monthly costs are to run the site, I was informed that it is somewhere around $1.5 million. I was also told that this information is available on their site, but have yet to find and confirm what I was told. What I did find, however, is that as of April 30th of this year, eLance was reported in a press release to have conducted more than $60 million in transaction volume in its less than two year life span. At a 10% transaction fee, that is $6 million in revenue for eLance. As well, this privately held company has attracted more than $65 million from various investors. ELance also boasts having connected more than 300,000 businesses and service providers, spanning more than 160 countries worldwide.

This does not sound like a company that needs to charge a subscription fee to maintain their site, on top of the transaction fee charged. When asked, I was told that there are somewhere between 1,000 and 2,000 service providers, covering all fields at eLance, which means that the site should just be overflowing with work for freelancers. Why then, I wonder, is there a topic entitled "Where Have All The Buyers Gone?" listed at the Water Cooler?

I’ll admit, I did decide to give the Select Service Provider a three-month trial, to see the difference. It is true that the number of projects that go unawarded in the Select category is significantly less than the number of unawarded projects in the Basic category. Unfortunately, however, it seems that the number of projects being posted since eLance has implemented the new subscription categories has greatly decreased, making competition greater than ever. It appears that, in order to obtain any work, a person must be willing to do the work almost for free.

As eLance does not offer any type of partial refund should a person decide to cancel their subscription early, I’ll be sticking it out until mine runs out, and, unless I’m getting rich, I’ll be running out on them.

Loralei Walker Loralei Walker
I am a 30 year old single mom, who works from my home office. In October of 2000, I decided to put my love of writing to work for me, and joined the freelance world. I have been writing ever since I can remember, and years back, I turned down the opportunity to have some of it published (silly me). Ergo, I am as yet unpublished in print, but I have had the opportunity to create web content for a couple of sites that are soon to be launched, and am in the process of authoring my first book, "The Survival Guide For Single Moms." I offer services covering all aspects of writing, as well as translation services. My website is www.just-write4you.com; I created it myself, and am very proud of it. Well, that's me in a nutshell, I guess. I wonder if that means that I'm a nut?
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