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How to Develop a Freelance Marketplace like Upwork and Keep It Competitive

marketplace-like-upwork

The article was updated on June 5, 2020.

The so-called “gig economy” is no longer just another buzzword. With 57.3 million freelancers in the US alone (which makes around 36% of the total country’s workforce), there is no denying the fact that it is now the reality we live in.

It is commonly known that some of the world’s largest and most successful companies, including Airbnb, Amazon, Walmart, Google, and Apple, work with freelancers. Following their example, more businesses worldwide refuse to limit themselves to the local pool of candidates and go looking for the required talent overseas.

It is especially true within the conditions of the COVID-19 outbreak that caused job cuts all around the world and forced workforce to look for new job opportunities online. That is why freelance websites like Upwork, offering a convenient, reliable, and easy way to access the global freelance talent, have become so popular.

Yet, despite a large number of the existing freelance online platforms, none of them are perfect. That represents an opportunity for a business to join in and develop a freelance marketplace that can close the existing gaps.

If you are considering developing a freelancing website, keep reading. In this article we explore the main features of freelance sites like Upwork and share our experience on how to build one from scratch.

freelance-marketplace

What is a freelance marketplace and how does it work?

A freelance services marketplace is an online platform where businesses can find and hire individual contractors to do some work remotely. Websites like Upwork (previously known as Elance) are very popular among digital businesses. They act as an intermediary providing a safe and convenient way to contract remote experts for one-time projects.

As a customer, you can use a platform to look for freelancers and agencies that deliver a wide range of services, such as design, marketing, copywriting, and software development. Upwork uses big data algorithms to analyze a job you’ve posted and offers you a selection of likely candidates before you hit the Search button.

For service providers, Upwork algorithms offer matching jobs based on their profiles. Freelancers and agencies can also search for projects and respond to client invitations. As the number of successfully completed projects increases, so do the chances of service providers to attract more clients.

Online freelance marketplaces can vary depending on the type of work (one-time projects with fixed rates or ongoing hourly projects), services provided (engineering, design, copywriting, etc.), engagement models, geographical preferences, and so on.

Some alternative examples to Upwork are:

  • Freelancer.com
  • Toptal
  • Guru
  • PeoplePerHour
  • Fiverr
  • CloudPeeps
  • 99designs (a freelance online platform for web designers)

 

freelancing-websites

Top 7 features for an Upwork alternative

Such websites are typically quite feature-rich and cover the complete process of working with a freelancer. Thus, it is almost impossible to fit all of them into one simple list.

However, there are certain features that lie at the core of every freelance marketplace out there.

Here is a common set of features for freelance websites like Upwork:

1. Registration and user profile. Online freelance marketplaces usually have two types of users – customers and freelancers. Alternatively you can introduce one more profile type – agencies.

Apart from the photo, bio, skills, and a list of completed projects, a user (freelancer) profile can include some additional information:

  • Rating and reviews. Showing the number of completed projects, overall satisfaction rate, as well as some other information could be very helpful when choosing contractors or bidding for a project. That is why it is important to implement a reliable and transparent rating and review system.
  • Portfolio. Code samples, diplomas, and product screenshots can also help freelancers demonstrate their experience.
  • Skills tests. It is another way to prove your expertise as a freelancer and to make the right choice as a customer.
  • Verification. You need to make sure the person behind the account is not a scammer and can be trusted. Thus, you need to implement a mechanism that will allow you to identify the freelancers and verify their identity. This can be done with the help of ID and/or video call.

 

upwork-freelancer-profile

2. Advanced search. Users should be able to browse through the available projects/freelancers using various filters, such as domain, specific skills, hourly rate, date posted, etc.

3. Job listing. Users (customers) should be able to post their projects on the platform to let freelancers know they are looking for specific skills.

4. Bidding mechanism. Freelancers should be able to reply to the relevant job postings and offer their services.

5. Messaging. This is a private chat room where the customer can talk to the pre-selected freelancers and discuss the project details. Later on, it can be used as a project communication tool, if necessary.

6. Project management tools. A popular solution for a freelance services marketplace is the addition of a time logging feature to ensure transparency of the freelancer’s work. It is also a convenient way to track the time worked for hourly projects.

7. Payments. The online freelance marketplace typically handles all transactions between the customer and the contractor. A popular solution is an escrow payment option. You should also provide integration with the most popular online payment gateways as well as credit cards.

On top of that, you can introduce certain perks (pro features) for those users who are willing to pay for them. For example, Upwork offers personal services pre-vetting candidates from an exclusive talent pool of proven professionals. It would also be useful to augment your website with a mobile app so freelancers can always be in touch with their clients.

upwork-freelancers

How to develop a freelance marketplace like Upwork

A roadmap to developing a freelancing website:

1.Choose your business niche

Targeting a niche market is always a good idea. There is no way you can build a product that caters to everyone. Find your specific audience and build your product with their needs in mind.

There are several examples of such an approach: 99designs is specifically aimed at designers, while Fiverr originally positioned itself as a place to get cheap (starting from $5) and fast freelancing services.

2. Decide on a marketplace business model

Deciding how you will attract revenue is crucial before you actually start developing a freelancing marketplace. The business model will, ultimately, dictate the customer journey and the type of user interface you will build for your platform.

All in all, there are about 10 marketplace business models, but the main means of generating revenue include the following:

  • Selling fees: Although this model is believed to be one of the most tricky ones to set up and maintain, it will bring you steady income. Under the “Selling fees” model, you charge a portion of each sale that takes place through your freelancing marketplace. Your options include charging a flat fee, a percentage-based fee, or both.
    For example, Upwork will charge service providers a 20% fee from the first $500 bill, 10% from every $500,01 to $10,000 bill, and 5% from every billing exceeding $10,000. Freelancers also get charged for an additional number of connections as they bid for Upwork assignments.

    upwork-service-fees

  • Subscription model: Deemed best for online marketplaces, this model will enable you to generate revenue in the form of regular monthly, quarterly, or yearly membership payments. The subscription model has distinct advantages over one-time payments since it will ensure that your marketplace is well-sustained even through the most turbulent startup period.
    It’s always a good idea to include different subscription types with varying sets of featured services. Upwork membership offerings, for example, vary depending on the price and include a different scope of services for individuals, businesses, and enterprises.

    upwork-subscription-model

  • Payment processing and transaction fees: This model enables you to charge a small fee for every financial transaction that takes place in your marketplace. You get paid for processing membership, vendor earnings, advertising, and listing payments. Simply put, the more payments you process, the better.
    For example, Upwork delivers payment to 170 countries and charges a 3% fee for processing every client/service provider transaction. On the downside, this revenue model is hard to put into practice, and the clients aren’t usually happy.
  • Sponsored features: This can be a featured product or business profiles on the main page of a freelancing platform, or on top of listings. This model allows members to get additional exposure, and may also include mentions in email newsletters and blog posts.
    The sponsored promotions revenue model is widely used by many online marketplaces, and Upwork is no exception. The rates may differ depending on the promotion type and the length of the promotion period.
  • Ads from 3rd party advertisers: This revenue model works similarly to the Sponsored features model but this time it’s the third-party companies who can advertise through your freelancing platform.
    You can use advertising models like: CPI (cost for impression), PPC (pay-per-click), cost per post, and cost per period. You can also leverage ad software like AdSense for ad placement.

Freelancing platforms may also use Sign-up fees or Pay per lead model to attract revenues.

As you can see, these revenue models may target customers, service providers, third parties, or all of the above. As a rule, one model will prevail, although freelancing platforms normally use a combination of several payment models.

3. Finalize your requirements

The project definition stage is a good place to start. Before you jump headfirst into the design and development, you need to understand exactly what is needed. This will save you lots of time and effort in the long run.

4. Design

The next step is to create a visual identity and a user interface for your online freelance marketplace. The UX/UIdesign process usually includes several stages:

  • analysis
  • wireframing
  • design

Read more: Corporate Identity for Startups. How to Build a Brand that can Compete with Market Leaders

 

app-design-process

5. Prototyping

As soon as you have the graphic design at hand, you can see your product in action, or even test it out with real users. This is when rapid prototyping comes into play. It doesn’t require as much time (and money) as development does, yet proves to be very helpful when validating your assumptions early in the process.

6. Marketplace development

Now that you have created, tested out, and polished your visual design and UX, you can put it into code and build a marketplace website.

If you don’t have an experienced CTO in your team, we recommend partnering with a trusted technology provider to hire a dedicated development team. Your team will help you choose the optimal tech stack and define the minimum viable set of features to start with.

Read more: How to create an online marketplace MVP

 

7. Testing

Although we’ve mentioned testing after the development stage, they usually go in parallel. Sometimes tests are written even prior to the code itself (in case of Test Driven Development).

Yet, regardless of the approach you take, quality assurance is absolutely necessary if you want to build a functional and successful marketplace.

8. Launch and ongoing improvement

The development doesn’t end after you launch your marketplace website. You need to work on improving your product and scaling it. There is always something you can do better, just like there is always room for growth.

freelance-platform-development

How to keep your freelance marketplace competitive

If you are going to create a freelance marketplace, it’s important to understand that this market is highly saturated. Your product should be able to stand up to the competition.

Here are some tips on how to create a freelancing website that is competitive and commercially viable:

  • Conduct a thorough market analysis. To stand out from the crowd, you need to know who you are competing against. Get to know your competitors, their benefits and drawbacks. Use them to build a better product or create something completely different if you see that there is a demand for it.
  • Learn about your target audience and its needs. The best strategy is to aim at a certain problem your users are facing and help them solve it. Is there a specific audience neglected by the other freelance services marketplaces? For example, small-niche platforms for designers, copywriters, or specialized developers (e.g. Blockchain, a certain programming language, etc.) often turn out to be more popular than the all-purpose websites like Upwork.
  • Find your unique selling point. What makes your product different from the rest of the freelance marketplaces? You can find a specific niche to target or add a certain twist to your product to make it stand out.
  • Consider different business models. There is no unified freelance marketplace business model. You can choose to build an exclusive platform with 100% paid access, but in this case, make sure you can offer something really outstanding in exchange. A more popular option would be to charge service fees from the money that is paid through your platform. Alternatively, you can offer your platform services for free and charge only for the pro features.
  • Experiment with new features and technologies. The list of features used by freelance services marketplaces is never 100% complete. There is always something you can add. For example, you can offer an integration with some of the most popular project management tools, add a service chatbot to help your users with routine tasks, introduce AI-based candidate screening feature, etc.

And one more bonus tip: start small. To minimize the risks of launching a feature-rich product, start with an MVP first. This way you will be able to see if your marketplace will be of any interest to your target audience. If there’s no demand for the product, pivot and take another shot.

 

startup-team

Getting started: Build a freelance marketplace with Eastern Peak

Judging by our experience, a marketplace business model is extremely scalable and can be applied to various business domains both locally and worldwide. From Upwork to Airbnb or Amazon, there are dozens of marketplaces that lead the way in almost every industry. And, when applied to such a promising domain as freelance work, this model has shown its true potential.

As an example, view a video testimonial below of the Bizzabo event marketplace – the world’s fastest growing event technology company that empowers event marketers to manage, measure and grow professional events across the globe via their online event platform.

 

How to get started?

The product discovery phase is the best first step you can take to lay a solid foundation for the development of your online marketplace. It includes a functional specification, UX/UI design, and a visual prototype that will give you a clear vision of the end product. On average, this phase takes 4-6 weeks.

The product discovery phase can help you:

  • define a full scope of work and develop a roadmap for building a marketplace
  • set a realistic budget for your MVP and plan your resources
  • test the waters with your audience using a visual prototype
  • craft a convincing investment pitch
  • get to know your team

If you want to build a freelance marketplace, make sure to garner support from experienced technology professionals. We at Eastern Peak have the expertise and proven track record developing online marketplaces and mobile apps of various scales for companies and startups around the world.

Share your ideas with an experienced project manager and receive a free consultation. For more information on how we can help you bring your ideas to life contact us now.

Read also:

About the author:

Alexey Chalimov, CEO at Eastern Peak

As CEO at Eastern Peak, a professional software consulting and development company, Alexey ensures top quality and cost-effective services to clients from all over the world. Alexey is also a founder and technology evangelist at several technology companies. Previously, as a CEO of the Gett (GetTaxi) technology company, Alexey was in charge of developing the revolutionary Gett service from ground up and deploying the operation across the globe from London to Moscow and Tel Aviv.

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