The popular e-commerce platform Fiverr is an excellent source of freelance gigs. With an active buyer base of around 2.5 million, Fiverr offers freelancers a way to connect with a never-ending and diverse range of clients and projects. Whether you’re a buyer or a seller, before setting up your Fiverr account it’s important to know the ins and outs of how the platform works. For example, does Fiverr take a cut of your earnings?
At the end of the day, Fiverr is a business with shareholders and so it needs to generate revenue. But how does Fiverr make money? In this article, we take a look at Fiverr fees for both sellers and buyers.
Does Fiverr Take a Cut of Your Earnings?
Fiverr does take a cut of your earnings. Fiverr’s main recurring revenue source is its transaction-based fee model. Simply put, Fiverr makes money by taking a fee both from those buying a freelance service and those selling their freelance services on the platform.
Fiverr charges buyers a service fee per gig. This fee is $2 for gigs up to $40 and 5% of the order price if it’s over $40. If you’re a seller, Fiverr takes 20% of the gig fee. So, if you complete a $5 gig, Fiverr will take $1, leaving you with $4.
Think of Fiverr’s cut as a sort of finder’s fee. Fiverr aims to make the act of buying and selling services online as simple as buying and selling physical items. For freelancers, Fiverr potentially saves you a lot of time in terms of finding clients by connecting sellers and buyers and facilitating payment.
Fiverr fees for buyers and sellers also go towards the behind-the-scenes team. Fiverr offers technical support to its users and requires a team of employees to do this. They need wages, so Fiverr needs to make its money somehow!
How Else Does Fiverr Make Money?
In addition to Fiverr’s fees for buyers and sellers, there are several other ways the platform makes money. For example, Fiverr offers additional features such as paid advertising for sellers to promote their gigs. Sellers bid on an ad spot and Fiverr then charges the seller a monthly fee based on the number of clicks the ad receives.
Fiverr has also created several affiliated products. AND.CO is Fiverr’s G Suite (now Google Workspace) equivalent, offering an integrated suite of tools for freelancers. AND.CO aims to help streamline the administrative aspects of freelancing such as managing payments, drafting contracts, and time tracking. While some basic features are free, AND.CO charges a monthly subscription fee for users to access its full suite of tools and support.
Fiverr also offers affiliated courses through Learn from Fiverr. Taught by top-rated Fiverr Pros and other leading experts, these short courses start at around $24. They’re specifically targeted at Fiverr sellers wanting to learn new skills and work on their professional development.
Like most tech start-ups, Fiverr has also gone through several rounds of funding. Since its inception in 2010, it has raised around $111 million in capital from investors.
Fiverr Fees for Buyers
Fiverr fees for buyers are clearly set out before a buyer finalises a purchase. After selecting the gig they want, the buyer goes to a payment options page which shows a breakdown of the gig fee, any necessary taxes, and Fiverr’s fees.
So, what are Fiverr fees for buyers? When a buyer places an order, buyers pay Fiverr the gig fee plus a service fee. The service fee, which goes to Fiverr, is $2 on gig fees from $5 to $40, and 5% for orders over $40. This incentivises paying for larger orders to avoid paying more than 5%, as a $10 order technically incurs a 20% fee of $2!
Fiverr Fees for Sellers
While it’s free to set up a seller account on Fiverr, Fiverr takes a 20% cut of all orders. As a seller, the money you earn goes into your Fiverr account. You can then make a withdrawal from this at any time. It’s important to keep in mind that while Fiverr doesn’t charge any withdrawal fees, the withdrawal provider (e.g. PayPal or Payoneer) may charge a fee.
So, let’s take a look at Fiverr’s fees for a buyer and a seller for a $10 gig:
- The buyer pays $10 for the gig
- The seller receives $8 for completing the order
- Fiverr gets $4 total in fees ($2 service fee paid by the buyer + $2 transaction fee paid by the seller)
It’s easy to look at this and think you’re losing money. This is especially true if you’re dealing with orders in the hundreds of dollars, as Fiverr’s cut could be in the hundreds of dollars too. But Fiverr is providing a service, and it’s always better to have 80% of something than 100% of nothing. If you want to learn more about using Fiverr, check out the rest of our articles here.