freelance marketplace business plan

How to Build a Freelancer Marketplace Like Fiverr and Upwork

Tech Researcher and Writer

Developing a freelancer marketplace involves finding your niche, selecting essential features, designing a user-friendly interface, launching an MVP, and improving it based on users feedback.
A marketplace offers a lot of monetization options, including charging freelancers and buyers, offering subscriptions, and providing additional services like educational courses.
It’s essential to solve real problems faced by freelancer marketplace users to stand out in the competitive industry. This may include leveraging AI for better matchmaking, improving financial transparency, and enhancing communication tools.

According to an Upwork study , in 2023, 64 million Americans engaged in freelance work, representing 38% of the whole US workforce! Now imagine that they all used your freelance marketplace. If you only charged a dollar for using it, you’d still be a millionaire.

However, the competition is intense, and the number of freelance marketplace platforms is great. And many of them are worth millions of dollars. Although the market seems to be brimming, both freelancers and companies that hire them are not quite satisfied with the services provided. This creates space for a more advanced software platform to be launched. You could be the one who changes the entire industry with a superb freelancer marketplace. In this article, we’ll show you how.

Get comfortable and prepare yourself for:

A brief introduction to how freelance marketplaces work and why people love them so much
How a freelancer marketplace looks from the business perspective, and why your idea is so potentially profitable
Insights on how to build a high-quality solution and appeal to users
Must-have functionality for a freelancer platform and useful tips on how to implement unique features

Keep reading for all this and much more!

What is a freelance marketplace and how does it work?

A freelance marketplace is a two-sided platform where companies can find and hire individual specialists for specific jobs and where freelance specialists can find work if their skills match requirements. Through freelance sites, contractors cooperate with freelancers remotely. Such platforms are so popular because they provide:

A bottomless source of talent. Companies can find various specialists with deep experience from anywhere in the world.
An extremely convenient way to hire. After filtering, shortlisting, and vetting, a client can start working with a contractor.
A simple tool for time tracking. Clients get precise information about how much time a freelancer spends on a certain task.
A built-in payment gateway . When the job is done, an employer pays a contractor right on the platform.

The most successful freelancer marketplaces today are Upwork and Fiverr. They both facilitate connections between freelancers and clients across various industries, providing a marketplace for a wide range of services. However, due to its simplified approval process, Fiverr is more suitable for beginner freelancers and short, one-time projects. Upwork, in turn, is more suitable for experienced professionals who prefer building long-term relationships with their clients.

Why a website like Fiverr can be so popular

Along with market leaders Upwork and Fiverr, other similar companies like Toptal and Freelancer.com make millions of dollars in revenue annually.

Let’s reveal why websites like Fiverr have become viable places to find software developers.

advantages of using freelancer marketplace

Freelance marketplace advantages for companies

Giants like Google, Amazon, Motorola, and Lufthansa Systems cooperate with freelance software engineers. Taking into account all the potential risks, hiring an independent contractor is still a good and profitable idea for these companies because of:

On-demand availability of talents: On an online marketplace like Fiverr, you can find specialists to handle certain tasks. Once the job is done, you can pay them and say goodbye with no further worries.
Wide range of salaries: The freelancing model allows you to reach out to brilliant specialists living in another country and cut expenses due to cheaper labor costs abroad.
Borderless market: Relying on a freelance marketplace to grow your business, you get an opportunity to work with different people from a variety of countries and implement cutting-edge technologies to outrun your competitors.

As you can see, there are a lot of reasons for companies to hire freelance specialists.

Freelance marketplace advantages for contractors

It’s projected that by 2027, 86.5 million people in the US will work as freelancers , which will make up 50.9% percent of the total US workforce. Both Millennials and Generation Z prefer flexibility and being your own boss to having a stable long-term position in a no-name company. And freelancing can give it to them.

Why is freelancing popular?

Low entry barrier: It is easier to start a career on a freelance website like Fiverr because people can apply even with no previous job experience.
Fast and easy way to find a new position: The field of freelance job opportunities is much wider compared to opportunities on traditional job sites.
Extra source of income: Even those with full-time office work can find a part-time project on a freelance platform to increase their revenue and enhance their skills.
Flexible time management: Freelancing allows individuals to control their own schedules, contributing to a harmonious balance between work and personal life.

These and other reasons are why more and more people wish to work as freelancers today.

Freelance marketplace for your business development

By launching a new freelancer platform, you get the chance to:

Generate enormous revenue: The number of freelancers is rising, and if you employ the right monetization strategy, you stand to make lots of money.
Change the freelancing industry: Solve existing platform issues, cater to users’ needs in a better way, and take your chance to change the entire freelancing industry with your web app.

By launching a new freelancer platform, you not only can generate significant revenue but also can get an opportunity to revolutionize the freelancing industry.

Now, let’s get down to freelancer marketplace revenue streams.

Monetization strategies for your freelance marketplace

Both Upwork and Fiverr have several ways of generating revenue. You can learn from their experience and adopt one of the following monetization strategies, or combine them:

Charge freelancers a service fee (1% to 5%) based on their earnings.
Charge buyers a payment processing fee (1% to 5%).
Offer freemium functionality. To assure your potential users that they can benefit from using your marketplace, allow them to use basic features for free and charge a fee for additional, more advanced features.
Introduce subscriptions. You can develop subscription plans for both employers and freelancers. For example, Upwork offers the Upwork Enterprise subscription plan for enterprises, providing additional tools and features for managing freelance engagement, and a Freelancer Plus subscription for freelancers, offering benefits like increased visibility, OpenAI-powered Chat Pro for repetitive tasks, and so on.
Provide additional tools. Bill users for services that will help them achieve their purposes more effectively. For example, Upwork offers compliance assistance and payroll services for hiring freelancers as full-time employees through third-party providers, while Fiverr provides services like video editing, scriptwriting, and SEO optimization to help freelance creators in their job.
Offer educational services. You can develop courses that will help users to improve their professional skills and, in that way, create an additional source of income for your marketplace. For example, Fiverr offers the Learn from Fiverr platform.

ways to monetize a freelancer marketplace

As you can see, both Upwork and Fiverr successfully combine several monetization models. Following their example, you can too. For instance, you can start by simply charging a small percentage from freelancers and buyers, then develop subscription plans as your platform grows.

How to Develop a Freelance Marketplace Like Upwork

Once you have enough inspiration and the intention to build a website like Upwork, it’s time to find out what the process typically looks like. We will guide you through the process based on our own experience creating marketplaces:

Step 1. Find your niche

The first thing you should do is decide on your positioning: Do you want to build a website like Fiverr or Upwork where everyone from graphic designers and writers to programmers and marketers can find jobs? Or do you want to build a niche freelancer marketplace?

In the first case, your competitors will be dozens of established companies. In the second case, you will target a smaller audience with specific needs.

According to Forbes , the most in-demand skills for freelancers in 2024 are:

Website development
AI services
Video editing
Social media content and management
Mobile app development

Employers looking solely for specialists skilled in website development, for example, will probably prefer doing that on a freelancer marketplace for website developers. Such a marketplace would attract thousands of freelancers and employers looking for successful cooperation in their field.

There are a lot of options for building a niche marketplace. For example, you may want to build a marketplace for photo and video makers . Our team has contributed to the development of Creador, a marketplace aimed at connecting individuals and small companies with creative content producers. Or, you may want to follow experienced businesses and build a marketplace like Etsy that connects people who want to buy/sell unique items, or you can build an auction marketplace like eBay .

Apart from building a general or niche freelancer marketplace, you also have the option to build a white-label marketplace — a customizable platform that other businesses can rebrand and use as their own. The Clockwise team had an opportunity to contribute to the development of Whitelance — a white-label online marketplace platform that lets people launch their own Upwork-style platform in just a few days. Starting with an already functioning web application, our team rewrote the application’s architecture from scratch, implementing multi-tenancy so it could serve multiple clients and developing new functionality for freelancers, companies, and marketplace admins. As a result, our client got a scalable platform able to cope with millions of users.

Once you have decided what kind of marketplace you want to build, the next step is to choose which features to implement.

Step 2. Choose features

When developing a freelance website like Fiverr, you shouldn’t overlook the importance of its features. In this section, you will find out everything you need to know about basic functionality as well as how to cater to specific users’ needs.

Basic functionality for an online marketplace like Fiverr

Let’s break down the features any freelancer marketplace should have:

Now, let’s take a look at role-specific features:

This is the skeleton of a basic freelancer marketplace. However, if you want to build a niche marketplace, you should implement some specific features. For example, if you are building a marketplace with location-specific services, you may add a map that shows nearby freelance designers offering their services. This is the central feature we implemented in Creador, allowing clients to choose contractors in their local area, making their cooperation more convenient.

Step 3. Design your marketplace

Considering the popularity of freelance marketplaces like Upwork and Fiverr, we can assume that the user interfaces of these websites are familiar to and convenient for marketplace users. Analyze the interfaces and user experience of top freelance marketplace websites to see what they offer. However, you should also keep in mind that your website should be recognizable.

Experienced UI/UX designers within your team should develop a UI prototype and make sure it’s user-friendly, meets modern design standards and trends, and stands out among other similar marketplaces.

Step 4. Choose the tech stack and build an MVP

The technical part of development starts from choosing a tech stack that will allow you to bring your idea to life. From the perspective of our experience developing marketplaces, we can recommend the following scalable and up-to-date technologies:

JavaScript frameworks such as React and Vue.js for building a seamless front end
Node.js and the JavaScript runtime environment for using JavaScript on the back end

Choosing JavaScript for both frontend and backend development will streamline the development process, speeding up project completion and reducing maintenance complexity.

As for payment methods, we recommend using API integrations with PayPal and Stripe, which are used by both Fiverr and Upwork.

If you’re not sure that you have the necessary expertise to build the freelancer marketplace of your dreams, try product development services. This is exactly what you need if you want to invest in development wisely. As part of our product development services , we provide our clients with everything from idea validation through actual development.

If you have everything you need at this stage, your development team can proceed to developing an MVP — the first version of your marketplace for freelancers that has just enough features to be evaluated by the first users.

Why an MVP? , you may ask.

When our clients approach us with an idea, we always recommend starting with a minimum viable product (MVP). Here’s why:

Launching an MVP allows you to build and release your platform with core features only, using your budget rationally.
The MVP approach promotes fast time to market. Getting an MVP to market quickly means you can start attracting users and generating revenue sooner.
With an MVP, you can continuously improve your platform based on user feedback and market demands. This iterative approach allows for making informed decisions about what features to add next.
Starting with an MVP minimizes the risk associated with development of a new product . By testing the waters with a basic version, you can identify potential issues and address them early.

Thus, developing an MVP is a smart, strategic approach to launching a freelancer marketplace. It balances cost, speed, and user feedback, ensuring you build a product that meets market demands while minimizing risk.

Let’s suppose you have already launched your freelancer marketplace MVP. What’s next? How can you deal with the upcoming challenges?

How to increase the value of your online marketplace like Fiverr

To scare off competitors (both powerful well-known freelance platforms and fresh platforms), you need to cater to needs no one else is meeting. No doubt, a cool design and bugless functionality are important. However, satisfying customers’ wishes like no other solution can will become your distinctive advantage.

Even though there are many up-and-running freelancer marketplaces, none is perfect.

We have analyzed these factors and prepared an exclusive list of tips on how to solve real users’ problems with your fresh and crispy freelancer marketplace:

Implement AI features for optimization

AI-powered algorithms prove very efficient in connecting freelancers with suitable projects based on their skills and connecting clients with suitable freelancers based on their requirements. The less obvious use of AI includes AI assistants for optimizing job postings, automated proposal screening, and AI chatbots for customer support.

Use AI to help users with cost estimation

It’s hard to determine exactly how much someone’s effort costs. Freelancers who are just starting their careers on websites like Upwork often fail to price themselves correctly. Simultaneously, clients that try to estimate a project’s price may lack necessary information to do so. You can help your platform users to come up with adequate offers and expectations. An AI-based algorithm comparing a project’s complexity and prices for similar services will help to set a reasonable price. At the same time, this algorithm will help each specialist to define their hourly rates.

Improve communication between clients and contractors

The key challenge of remote collaboration is seamless communication. As a freelancer marketplace owner, you have to offer all possible tools to make collaboration seamless. Earlier, we mentioned that messaging is an essential feature. Here, we would like to emphasize that multi-channel communication will make users turn their heads towards your platform. Allow video calls within platforms, let users record voice messages and share important files, and use integrations with large language models like ChatGPT to help users improve their writing or automatically generate video call captions. Screen sharing is also essential. Make any conversation and discussion as clear, fast, and simple as you can.

Allow database and TMS integration

Project management may be a headache. Let your users synchronize data in their freelance platform’s accounts and corporate databases or task management systems. Enhanced with multi-channel communication, this will significantly simplify people’s lives.

Add some gamification

Let users collect badges or points for giving feedback, passing professional tests, or inviting their friends to a platform. Let them exchange these badges for money, discounts, free courses, etc. Remind them that each new project, as well as a hired contractor, can bring them benefits.

There are a lot of ways to improve users’ experiences with your platform. Start by fixing problems and move towards implementing new functionality.

Online marketplace like Fiverr: what the future holds

For many entrepreneurs, investing in freelance marketplace creation may seem a risky decision. However, a well-thought-out strategy and a reliable team increases your chances for success. As strange as it sounds, looking for reliable and stable partnerships on freelance marketplaces is a risky way to go. If this is what you want, think about cooperating with an outsourcing company that has experience developing marketplace platforms. This is the best way to wisely manage your budget and minimize risks.