Fiverr is an online marketplace for freelancers. In order to make a profit, Fiverr takes a cut from buyers and sellers in return for running the platform and acting as a middleman. I will explain what cut Fiverr takes from both parties.
Fiverr charge a service fee on every payment made to the seller from the buyer. The service fee is an additional 5.5% of the purchase amount. An additional $2 will be added if the purchase price is below $50. Sellers receive 80% of the purchase amount, not including the service fee.
Fiverr has risen rapidly in popularity because it opens the doors to freelancers all over the world and creates a safe and protected marketplace for buyers and sellers.
I will explain fully the fees Fiverr charges and if there are any ways to reduce them.
How Much Fiverr Takes From Buyers
So, when the buyer begins to check out, Fiverr will add a service charge on top of the gig price and any extras added to the order.
Fiverr stated here that “As of March 2021, the service fees are 5.5% of the purchase amount. For purchases under $50, an additional $2 small order fee will be applied.”
For example, if the total order amount came to $45 after the gig price and any gig extras selected then:
Gig price = $45
Service charge: 5.5% of $45 = $7.48 + $2 fixed fee = $9.48
Final price = $54.48
However, Fiverr calculates the fee anyway. so you would not need to do this. It is just to break it down.
How Much Fiverr Takes From Sellers
Now lets cover the fees or cut Fiverr takes from sellers. This is more straight forward than the fees buyers pay.
It is simply 80% of the original gig price, gig extras and tips given.
Understandably, this may seem quite high, but Fiverr does protect sellers. For example, the buyer on Fiverr has to pay upfront. This means that as long as the seller meets the buyer’s requirements, they will get paid and won’t have to worry about the buyer taking the work and not paying.
For example, the buyer paid $54.48 (this includes the service charge). The gig price remains at $45.
Gig price = $45
Fiverr takes their 20%
The seller would be able to withdraw $36.
Fiverr does not charge any withdrawal fees.
The payment processor used may charge a fee as well. If it’s required, there could also be a fee for the currency exchange as well.
The Benefits Of Fiverr’s service charge
Of course, the big disadvantage Fiverr users see is the fee. But here are the benefits of the service charge:
- Creates a safe market place to trade – ensuring you get paid or get delivered your service/product.
- Support with any issues you may have.
- Up-to date platform.
|Advantages for sellers on Fiverr||Advantages for buyers on Fiverr|
|Ensures you get paid for your work.||Ensures you will get your service/product delivered on time.|
Revisions may be available
Sellers are rated by previous buyers.
There are other benefits as well.
Is It Possible To Reduce Fiverr Fees?
It is understandable that Fiverr buyers and sellers dislike these large fees because the seller loses out on income and it costs the buyer more.
But as previously mentioned, the fee this protects both parties from being scammed and ensures both are happy with the final outcome (The seller gets paid and the buyer is happy with their product/service).
The only way to reduce or not pay Fiverr fees is by not using the platform and working together privately. However, this leads to Fiverr’s terms of service being violated. For example, in Fiverr’s terms of service it states “You may not offer direct payments to Sellers using payment systems outside of the Fiverr platform.”
Therefore, you must follow Fiverr’s terms of service to use their site.
If you pay outside of Fiverr to avoid fees/commission, then this would violate the terms of service.
The only way to not pay Fiverr’s fees would be to not use the platform. However, it is hard to find trusted and high quality freelancers without the help of a middleman such as Fiverr which is why many users are content with paying a fee.
Why Fiverr can charge a service fee
Fiverr can charge a service fee because they have a good platform and have plenty of buyers and sellers. Buyers and sellers are willing to pay the fee because without Fiverr they wouldn’t be able to find each other to trade in the first place.
In conclusion, Fiverr charges a 5.5% on the gig price, and if it’s under $50 there is an additional $2 charge as well.
The seller gets 80% of the original gig price. This includes any gig extras bought and tips as well.
However, there are multiple benefits to paying a service charge, such as a safe and protected market place to trade in.
It is important to remember, the fee may cut in your revenue and profits, but without Fiverr you may not be able to find the ideal buyer or freelancer, so paying the fee is justifiable.
Read more about GuideRealm here.