The Gig Economy is Broken: How Platforms Exploit Freelancers and How to Overcome It

Initially celebrated as a revolution in work flexibility and independence, the gig economy has increasingly become a challenging space for freelancers. While platforms like Upwork, Fiverr, and Freelancer offer opportunities to connect with clients globally, they seem to prioritize customer needs over those of freelancers.

As a freelance writer who has braved the stormy seas of the gig economy, I’ve experienced the highs and lows of working through online platforms. When I first started freelancing, I imagined a world of freedom, flexible schedules, and a stream of rewarding projects. But the reality? It’s more like navigating through an unending game of price wars, unpaid invoices, and constant hustling just to stay afloat.

If you’re like me, you’ve probably signed up for multiple platforms, polished your profiles, and sent out countless proposals, only to be met with clients who want top-tier work for rock-bottom prices. Maybe you’ve completed a project, hit “submit,” and then waited—sometimes indefinitely—for payment. It’s frustrating, and disheartening, and can make you question whether this whole freelancing gig is worth it.

The truth is, while freelancing platforms promise a gateway to opportunities, they often come with hidden traps. They sometimes prioritize customer needs over freelancer well-being, leading to lower pay, intense competition, and difficulties in collecting payments. And let’s not forget the platform fees that eat into your hard-earned money or the unreliable rating systems that can make or break your reputation based on a single dissatisfied client.

But it’s not all doom and gloom. By understanding the pitfalls and learning how to navigate this broken system, you can still find success and fulfillment as a freelancer. In this newsletter, I’ll share my experiences, stories, and practical tips on how to rise above exploitation and build a thriving freelance career.

The Dark Side of Freelance Platforms

1. Prioritizing Customer Needs Over Freelancer Needs

The Reality: Freelance platforms are businesses first. They make their money by facilitating transactions between freelancers and clients, which means they’re inclined to keep the clients happy, even if it comes at our expense. Features like price comparison tools encourage a race to the bottom, pushing freelancers to lower their rates to remain competitive.

I once spent hours crafting a proposal for a seemingly perfect gig, only to find out the platform had recommended the cheapest option to the client. My meticulously detailed pitch was ignored in favor of a $5 offer.

Tip: Always remember, that the platform is a marketplace. To stand out, emphasize unique skills and experience in your proposals.

2. The Race to the Bottom: Price Wars and Low Rates

The ease of comparing prices on these platforms often leads to a race to the bottom. Clients are enticed by low prices, pushing freelancers to lower their rates to remain competitive and to secure jobs, which can undermine their ability to earn a sustainable income.

Early in my career, I offered $10 per 2500 words. After delivering high-quality pieces, I saw the client re-listed a similar job but this time for $6. It was disheartening to realize they were just hunting for the lowest price.

A customer might choose a freelancer who offers a logo design for $5 instead of one who charges $50, even if the more expensive freelancer has more experience and produces higher-quality work.

Tip: Instead of lowering rates, focus on the unique value you provide. Quality clients will recognize and pay for good work.

3. Lack of Legal Protection and Payment Issues

Freelancers frequently face legal challenges on these platforms, making it hard to enforce contracts or collect payments from non-compliant customers. The rules are often complex and subject to change, exacerbating the difficulties in pursuing legal action across different jurisdictions.

A freelancer might complete a project for a customer who then disappears without paying, leaving the freelancer with no recourse.

Tip: Always have clear, written agreements and use platforms with escrow systems to ensure you get paid for your work

4. High Platform Fees

Platforms typically charge substantial transaction fees, significantly reducing freelancers' net earnings. Combined with already low rates, these fees can make it difficult for freelancers to make a living wage.

Example: A platform might charge a 20% commission on every project, meaning that a freelancer who earns $100 only receives $80. Platforms like Upwork.com have reduced theirs to 10% which I find helpful, but guess what -they increased bidding fees. LOL, absolutely crazy!

Tip: Factor in platform fees when setting your rates. Alternatively, seek out platforms with lower fees or build direct client relationships.

5. Freelancers Lack Ownership of Customer Relationships

Freelancers do not own the customer data on platforms, hindering their ability to build lasting relationships and a sustainable business. If a freelancer leaves a platform, they often lose access to their customer base.

Example: A freelancer might build a strong relationship with a customer on a platform, but if they leave the platform, they lose access to that customer.

Tip: Always try to establish direct communication channels with your repeat clients (within the terms and conditions of the platform) and encourage them to contact you off-platform for future projects (that is, if they are comfortable).

6. Unclear Service Descriptions and Scams

Vague or misleading job descriptions can entice freelancers with false promises, leading to unpaid work and a damaged reputation.

Example: A customer might post a job description that promises high pay for simple tasks, but then only pays a fraction of the promised amount or refuses to pay at all. I once took on a project with a description that sounded straightforward. After countless revisions and additional tasks, the client refused to pay the agreed amount, claiming the work didn’t meet their evolving expectations.

Tip: Clarify all project details upfront and have a written agreement outlining the scope of work and payment terms.

Thriving in a Broken System

While the gig economy poses significant challenges, freelancers can take proactive steps to protect themselves and build sustainable businesses. It’s possible to carve out a successful freelancing career. Here’s how:

1. Build Your Own Customer Base

Freelancers should focus on building their customer base outside of platforms. Networking, creating a professional website, and actively marketing services can help bypass platform dependency.

Tip: Use social media and professional networks like LinkedIn to connect with potential clients. Regularly update your portfolio and ask satisfied clients for referrals. I started my newsletter about my freelancing journey and shared tips on social media. This not only showcased my expertise but also attracted clients who valued my skills.

2. Specialize in a Niche Market

The Strategy: Focusing on a specific niche can reduce competition and attract clients willing to pay for specialized expertise. If you excel in writing for the tech industry, market yourself as a tech content specialist. When I began specializing in tech content, I found clients who appreciated my in-depth knowledge and were willing to pay premium rates for quality content. I have also written about whether or not you should niche (yet) -Check it out.

Tip: Identify a niche that aligns with your skills and interests, then market yourself as an expert in that field. For example, specialize in website design for healthcare companies or content writing for tech startups.

3. Be Selective with Clients

Choose clients who value quality and are willing to pay for expertise. Avoid clients with vague job descriptions or a history of negative reviews. After several bad experiences, I became more selective with clients. This approach led to more fulfilling projects and better pay.

Tip: Develop a client vetting process. Check client reviews, ask detailed questions about the project, and ensure clear, written agreements before starting work.

4. Focus on Value, Not Just Price

Emphasize the value and quality of your work rather than competing solely on price. High-quality services can command higher rates and attract better clients. I started including case studies in my proposals, showing the results I achieved for previous clients. This helped me justify my rates and attract clients who appreciated quality over cost.

Tip: Highlight your unique skills and experiences in your proposals. Provide case studies or examples of successful projects to demonstrate your value.

5. Avoid Free Sample Work

Avoid providing free samples, as this can be exploited. Instead, showcase your portfolio or offer a small, paid trial task.

Tip: If a potential client requests a sample, provide links to your portfolio or offer to complete a small, paid task to demonstrate your capabilities.

6. Explore Alternative Platforms and Direct Pitches

Look for platforms with better terms or pitch directly to businesses to avoid platform fees. Develop a pitch template and reach out directly to potential clients.

Tip: Research other platforms and join freelancer communities. Develop a pitch template and reach out directly to companies that could benefit from your services.

The gig economy may be broken, but...

I remember the sleepless nights wondering if I’d made the right choice, the frustration of chasing payments, and the countless hours spent on proposals that went unanswered. Yet, through it all, I learned valuable lessons that helped me not just survive but thrive. By building my own client base, specializing in a niche, and focusing on quality over quantity, I’ve managed to turn freelancing into a fulfilling profession.

If there’s one piece of advice I can leave you with, it’s this: don’t lose sight of your worth. Platforms may try to commoditize your skills, but you have the power to shape your career. Network, market yourself, and choose clients who value what you bring to the table. Most importantly, remember that your journey is unique, and your resilience and dedication will pave the way for success.

Stay strong, stay creative, and keep pushing forward. The gig economy may be broken, but with the right strategies and a determined mindset, you can build something truly remarkable.

Until I write to you again,

Joyce.