The gig economy is estimated to reach 43% of the US workforce by 2020. This number includes all categories of self-employed citizens – from web designers and software engineers to Uber drivers and tradespeople.
According to Accenture, 20% of Fortune 500 companies are already using Upwork and the number of contract hires will only increase. Does it mean that new freelancer marketplaces will emerge and gain power? Yes! Even though the competition between platforms is fierce, there is always a place for new players. If you are one of them, click “Continue Reading” to get prepared for your new project launch!
Before we jump into the list of useful tips on how to build a website like Upwork, let’s face some facts about why you should start a freelancer platform in the first place when there are hundreds of existing marketplaces besides of the HR managers who are constantly hunting.
Here are some facts:
All the data tells us that freelance business will be on a wave for the years to come. It is definitely worth riding this wave, and here are some tips that will help you to do so effectively.
1. Research on the current challenges in the niche
“By far the most common mistake startups make is to solve problems no one has.” — Paul Graham
If you have decided to start site similar to Upwork, I bet you already thought about the current challenges and needs of your niche and how to manage them with your product. The biggest challenge for a startup is competition. And in the freelance workforce niche, it will be not easy to stand out among the leaders of the market who still continue to multiply their revenues, bringing in more and more annually:
Upwork: $253 million
Toptal: $100 million
Fiverr: $75.5 million
99designers: $60 million
Freelancer: $52 million
Still, nobody is perfect, and existing platforms have their own difficulties that cause people to search for alternatives. Here are some of the challenges freelancer platforms deal with:
1. Payment delays
Besides the opportunity to find clients quickly, one important motivation for any freelancer to register on a platform is getting paid for the job they did without additional efforts. However, there are many cases where freelancers do not get money for a week or at all!
As freelancers come from any part of the world, they expect to have a choice of payment methods except for PayPal and some other services, which are not available in certain countries. Most platforms allow withdrawal in US dollars only. Thus, freelancers lose money on the conversion from USD and transactions take longer. Freelancer jobs are usually cheap, so each coin counts for a worker. After paying a fee to PayPal, then losing a percentage due to the conversion of USD to the national currency, waiting weeks for getting money is frustrating for anyone.
3. Quality vs. Quantity
There are two sides to this problem.
The first type is freelance marketplaces like Upwork. It allows registering with few acceptance criteria, without vetting freelancers’ skills and reputation. On the one hand, this allows you to quickly create a large pool of freelancers to provide choices for your clients. On the other hand, without checking your freelancers, you cannot guarantee the quality of their service. This approach puts the platform’s reputation at risk in the beginning when there are no ratings or feedback from clients. After hiring one or two freelancers who fail to perform well, a client will refuse to use the platform and find another marketplace.
The second type of platforms, on the contrary, filters and interviews their users to pick the best of the best. These marketplaces spend a lot of time for checks and their talent bank is growing slowly, which leads to the deficiency of supply to all their clients. Thus, Toptal vets freelancers through tests, screening, and live interviews to pick only the top professionals. Of course, it takes a lot of resources to scan all the candidates and make sure they fit the jobs.
The challenge for a startup here is to find the golden mean between these two extremities.
2. Identify your target audience
Before you start a freelancer platform, you must define who your client is. Is it an individual, small entrepreneur or a large corporation? Also, decide on who your freelancer will be – a highly-skilled rare specialist or a student searching for part-time jobs and experience? Knowing your audience, you will be able to create a value proposition exactly for them.
Pay attention to trends as well. What audience should you focus on now?
The transfer from the industrial to the digital era is accompanied by the disappearing of prejudice to freelancers’ work quality. If previously freelancers were regarded as cheap, low-qualified workers, now the marketplaces focus on selecting rare and highly-professional specialists that are interested in the growth of their client database and salaries.
Quick search, a great pool of candidates, a simplified hiring process, online management, and the opportunity to hire on-demand for temporary jobs are the biggest drivers of the freelance economy.
Focusing on Enterprises can be more profitable for platform owners. Upwork, Fiver, and other existing marketplace understand this and have already created ‘Pro’ versions for Corporate clients. On the flip side, if you choose to focus on this audience, be ready for big guys to demand excellent quality. The risks are high.
3. Define your value proposition
Knowing your target audience and their challenges, you can make a value proposition that will cover some existing drawbacks of the niche.
There are 3 main values that can be provided to freelancers and clients:
Accessibility. As we already discussed, depending on your aims you can either provide easy access for everyone and gather a large audience (like at Upwork or Freelancer) or you can restrict access by filtering professionals by their qualifications and experience, thus attracting only serious clients (like Toptal does). Reputation verification, payment verification, gathering rare specialists, and other ways of filtering will allow you to create a unique pool of freelancers that clients will appreciate.
Price. Analyze competitors’ prices and services and find how you can make the price for some services lower without cutting your margins. For example, it can be some valuable additional services like a project management layer between client and freelancer (like at RemotePanda), some auction bidding among freelancers for a better price, or guaranteed money back in case of bad service.
Time. Try to find the solution for the major industry challenge of time minimization for receiving payments. Thus, you will attract more freelancers to your platform.
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Marketplaces differ in types, business models, purpose, and feature sets. To stand out among competitors, you need to define your niche, target audience, what project you are aimed for, and how you are going to earn money. There are general marketplaces like Upwork and Freelancer, but there are also a lot of narrowly specialized websites with less competition in the niche.
Thus, Arcbazar, our client, created the first global contest platform for designers and architects. iWriter is specializing in all kinds of text-writing. Toptal is aimed for highly-qualified professionals. NoCowboys is a platform for freelancers from New Zealand and Witmart.com is mostly for Chinese employees. What is particular about your projects? This is what you need to figure out!
Depending on which type of platform you choose, the feature set and business model will differ. Here are some of the common freelance marketplaces types:
Link buyers and sellers living in a single location
90% of freelance platforms make money from commission charges. But this is not the only way on monetization. Business models can include the following:
This is one of the most popular business models. You charge a service fee on every transaction made on the platform. For example, Upwork takes 5-20% of the freelancer’s earnings.
Gigs and Packages model
The freelancers estimate a piece of their job and set the price. The client purchases the necessary volume of services like in online shopping. Some services can be combined in packages. A good example of such a model is Fiverr.
Users pay a monthly fee to use marketplace services and features. There can be several options for any budget.
In combination with the subscription model, the freemium model can be proposed. Such a subscription type is free to use, but with limited opportunities. In case users need more options, they can upgrade for an extra fee.
To start using such a platform, a client should deposit money. If an employer is not satisfied with the services of hiring, the marketplace refunds the deposit. For example, Toptal requires $500 for an initial deposit.
As an additional source of money, the platform may propose ‘highlighting’ freelancers’ profiles and showing them at the top of the list for an extra fee.
This is especially appropriate for Enterprise customers when the volume of work is hard to estimate using standard fees. For such clients, they can make special offers calculated by account managers.
Depending on your platform services and aims, some of the above models can be combined to provide more convenience to users.
6. Identify the core features
Any startup’s aim is to launch as quickly as possible to test the idea and start earning money and traffic. That’s why you should start development with the essential features your platform can’t live without. Here are some MVP features to build a platform like Upwork:
User profiles and settings
The user profile should contain all basic and contact info, a description of the experience and skills, examples of completed projects, gig offers, ratings, feedback from clients, etc. In the settings, users should be able to select the desired payment method, form of communication, alerts and notifications, and password settings.
Search and filters
Without a robust search and filtering, it would be hard to find a necessary specialist. At Greenice, we use the power of ElasticSearch technology to provide the quickest and smartest search for any size of the database. Here is how we created a search for NoCowboys, where people are searching for freelancers for home repair, gardening, and other help among local tradesmen in New Zealand. There are automatic search criteria that can be changed to look up by proximity, rating score, categories, recency of registration, etc.
Providing a variety of payments and currencies is essential for international platforms to attract more people to your service. Thus, in one of our projects, Arcbazar’s contest marketplace, we made localization in 10 languages and added 13 currencies for the users.
To make the life of users simpler, automate all billing processes, calculation of fees, and sending out invoices. Implement the escrow method to protect both your clients and freelancers from fraudulent behavior. Escrow is a payment method in which money is kept on the third-party account until the client approves the job completion. Then, the payment is sent to the freelancer. Such transactions increase the level of trust in the platform both for clients and contractors.
For example, at Fiverr, when the order is delivered, the client has only a few days to approve or send it back for review. In case the client does not do anything, the system automatically approves the job as completed successfully and sends the money to the freelancer.
Before hiring a person, a client may need to clarify some requirements or conditions of work. It may be necessary to stay in touch with each other with updates on progress. That’s why it is important to implement communication methods with the opportunity of sending text messages, files, and media files, otherwise people will communicate out of the platform and it will lose clients.
Reviews and ratings
After a job is completed, a client may rate it and give feedback to freelancers to help their rate among others. For example, for NoCowboys we created a smart system of verified ratings. Many rules made sure that everything was fair:
Only registered users can post reviews.
IP addresses are tracked: one feedback from one IP, even if one user has created many emails.
Only one rating from one registered email for one job done.
Displaying unauthenticated ratings with a special mark so that users understand that these reviews are not verified and can be fake. Look at the difference between authenticated and unauthenticated ratings:
7. Identify features to make you stand out among competitors
If you’re not spicing up your core functionality with some extraordinary features it will be hard to win the battle with your competition. Here are some ‘extras’ from the leaders of the niche that you can take as examples.
Using AI to match freelancers with projects
Using AI and Machine Learning for matching is on the peak of popularity because of the great opportunities that it brings. This is the main feature of the Gigster platform. The system does not use hard-coded algorithms for matching inflexible for changes, but on the contrary, uses each alternation of clients’ behavior to correct the matching preferences in the future. the ML-based matching compares freelancers by expertise level, skills, availability, timezone, and the hourly rate, among others, and identifies the best candidates for the job.
It’s a no-trivial task to both freelancers and clients to estimate the job price. Users can view and compare the other’s gigs and posts but still feel hesitant about the adequacy of their sums. To give more confidence to your users, implement a price estimator that will automatically compare the skills, timeframes, job volume, and special requests with the database to suggest the optimal price. We did an ML-based recommendation system for one of our key clients, Arcbazar, an international peer-to-peer marketplace for architects and designers.
As a rule, clients need to have the job done in the specified timeframe. That’s why both parts – clients and freelancers – have an opportunity to track the time with an independent tool to escape disputes. Having an option of showing the work progress also allows for a better understanding of how long it takes to get to the finish.
Variety of communications channels
It is very important for freelancers to be able to quickly clarify job details, control the fulfillment, and ask questions. Having multi-channel communication between client and freelancer can be what sets you apart. Add text chat, video calls, emails, and recorded voice messages that provide a convenient way to immediately discuss any questions.
Automatic gig and packages calculator
Gigs usually provide some basic price, but if a client needs more out of the standard volume, it’s a good idea to not waste time counting the price manually. All calculations should be automated on the platforms to create bills ready for payment. Like in Fiverr, for example.
Now that people make so many decisions on the go, having a mobile version of your platform can be a key factor for attracting the audience. A mobile app allows people to stay in touch and get notifications without needing to sit in front of their computer. It allows you to get instant answers to questions and view newly posted jobs, and thus, enhances customer loyalty as well as increases freelancers’ chances of being hired.
Project management for a blended team
Many companies outsource only some of their jobs while having an in-house team. It can be inconvenient to manage one project in two different software – tracking time, assigning tasks, setting milestones, sharing documents and ideas, etc. To manage everything in the same space, create a project management environment inside of your platform or create an option of integrating it with third-party tools to synchronize data between systems. Such an approach is used by Outsourcely, PeoplePerHour, and Guru.
Gamification and rewards
To stimulate the interest of your freelancers, introduce a system of badges that will allow them to increase their visibility, get access to projects first, purchase extra features, and other perks. For example, earning badges for participating in contests, passing tests and surveys, completing more projects on time, or getting the highest rates from the clients. We implemented badges for the NoCowboys marketplace which show the clients if the business is verified, registered, customer preferred, high rated, etc.
Combination with e-Learning
Freelancers need to grow professionally. Giving a chance to learn online and earn certificates in your platforms can increase their chances for a better job. Fiverr created an e-learning opportunity for their freelancers. After course completion, a badge certifying the new educational level appears on the freelancer’s profile and is shown to employers as proof of a freelancer’s skills.
8. Create specifications and send it for estimation
When we build a house, we need to have a plan of work to be done. How many stores and rooms will it have, what color of flour and walls should it have, etc? The same is for the development of a marketplace. To tell you how much it costs to build a website like Upwork, Fiverr, or other platforms, we need the answers to the following questions:
What is the goal of your project?
Who is your target audience?
What is your business model?
What features do you need (at least a high-level understanding of how it should all function)?
It is easier to estimate a project when we have written specifications with wireframes. Sometimes people write to us on the stage of an idea without having the requirements gathered and formatted into a document. In these cases, we can give you only a rough estimate and propose either that you create specs by yourself using a template or order a Business Analysis from us.
When the specs are ready and you have defined the core and additional features, you may order a web design. It should be modern, neat and usable to help users intuitively understand how to use your platforms. With the ready design, the development team can start the coding. At Greenice, we have experienced frontend and backend developers who will make it all work together.
10. Test it in the wild and improve
“Have no fear of perfection – you’ll never reach it.” – Salvador Dali
Do not strive to make it ideal all at once. As a startup, you aim to launch quickly with minimum time and budget waste. As soon as your MVP is ready and tested by the inner QA team, make it live and collect the first feedback from real users. Successful projects are always in the process of improvement and are gradually adding new features that allow them to scale up. Feedback from the customers allows to make useful changes and get rid of useless features that make the software clumsy and hard to use.
How to Apply This to Your Business
The freelance marketplace business is one of the main characteristics of the digital era’s workforce. Large Enterprises decrease the bureaucracy of the hiring process and prefer to use the benefits of a global pool of specialists, disregarding their location. That’s one of the reasons why you have a great opportunity to make headway despite the competition.
What we recommend is that you be quick to launch your MVP. For that, you need to create specifications that will outline your project’s logic and purpose so that our development team can estimate the work involved and start on it as soon as possible.