On Elance, so many businesses vie for the customer’s dollar that it is often extremely difficult to gain a foothold in this particular work-at-home, freelancing landscape. For instance, any particular job might receive upwards of forty bids. Although a freelancer new to Elance might idealize it as a freelancer’s free market economy, there are three realities that must be combated for a work-at-home freelancer to succeed.
Bid bait consists of fake jobs placed by competitors to eat up a company’s bids. They also consist of “quote” jobs placed by customers who don’t really need the job done at but instead need a price quote.
Elance doesn’t do much to decrease bid bait.
Service providers, however, can protect themselves by reviewing the customer’s award ratio, which represents the number of jobs a customer has actually awarded. The service provider should also look at the total dollar amount of the jobs awarded.
Although monitoring the award ratio is not a perfect form of protection, doing so will help a service provider identify genuine jobs.
Elance is notorious for allowing people to list jobs in the wrong categories.
The problem arises when a service provider conducts a keyword search for various types of jobs and different jobs of the same basic type show up across different categories.
Why are mis-categorized jobs a problem? Because Elance service providers must pay additional fees for the opportunity to bid on jobs in different categories.
The only real way to combat this is to monitor how many jobs appear in the various categories and decide if buying access to those categories is worth it. Again, unlike companies like eBay that allows bidders to flag mis-categorized auctions, Elance does little to organize its own categories. Could it be because they earn so much money as a result?
Service providers with multiple accounts
Multiple accounts allow service providers greater exposure to a client. In the afore-mentioned hypothetical scenario where 40 service providers bid on 1 job, what could very well be happening is that eight companies have five accounts each.
In this revised scenario, although a customer seems to have a vast number of choices, the customer is actually choosing between a handful of service providers. It’s analogous to someone being thirsty and having a choice between Coke, Sprite, Fanta, Dasani, or Odwalla. Financially speaking, whatever drink the person chooses doesn’t matter because all the products are owned by the same company: Coca-Cola.
How service providers use multiple accounts
Unscrupulous service providers open multiple personal accounts and multiple business accounts. Elance flags personal accounts as such, so although they do not carry the same weight as a business account, a well-crafted personal account still helps detract from a competitor’s bid.
Service providers then use multiple accounts to place bids at the low, average, and high end of the bid range. Doing so helps ensure they remain competitive across the bid continuum. If someone sets up even more accounts, they can literally saturate the bid environment making it likely that by pure chance, a customer will select one of their bids.
Setting it all up
- A service provider sets up multiple accounts. There are even various tutorials online about the best way to do this. During the setup process, a service provider will spend, say, $30 for access to three categories. Access to fewer categories will cost less; access to additional ones will cost more. Considering mis-categorized jobs, a service provider might want to target multiple categories.
- Service providers then spend, say, $20 for additional bids because although Elance provides a base amount of free bids, they also allow service providers to purchase additional bids.
- Service providers then post fake jobs, which they bid on and award to themselves. Because awarding jobs (even fake ones) results in paying Elance a commission, service providers must budget $300 to $400 for “startup marketing costs.”
- After “finishing” the job, they post glowing feedback, and the “marketing” is complete.
- These new “businesses” start out-competing their competitors.
Is it worthwhile?
Regarding industries such as web design and computer programming, each potential job could mean hundreds or thousands of dollars of income. The initial $400 to $450 investment used to establish multiple “business websites” can help a service provider double its revenue.
Yes. Some service providers might find it very worthwhile.
How does one combat multiple accounts?
The reigning opinion varies.
On one hand, a service provider can simply choose to out-compete the competitors, one and all. This strategy works for freelancers who have a known presence in their field and have acquired glowing references for an in-depth portfolio of work.
However, even when a qualified service provider chooses to out-compete all competitors regardless of how many accounts they might hold, the average bid win rate seems to hover between 20% and 30%.
On Elance, a bid-win rate as low as 20% will still bring in significant income. This is because the jobs, often technical in nature, are high-dollar jobs, so even if a company only wins two or three per week, it can still add up to thousands per month.
That said, meeting the competition on their own terms by opening multiple accounts can double revenue. When it comes to monthly income, there is a huge difference between $5,000 per month and $10,000 per month.
Although Elance has very basic safeguards in place to help prevent multiple accounts, the safeguards are so basic as to be non-existent. For instance, service providers are required to list a phone number. With everyone having a cell phone, this does little to prevent multiple accounts.
Consequently, how one competes basically comes down to question of philosophy and what a service provider needs financially. Regardless, it’s important to be aware that in the world of work-at-home freelancing, it’s not all fair game and chivalry out there. It’s a digital jungle. Be careful.