Fiverr, a marketplace for freelancers just joined the parade of software companies going public. The Fiverr filing sets up a comparison of Fiverr versus Upwork, the grand-daddy of freelancer marketplaces. (Upwork went public last year.) (See here and here).
Upwork Versus Fiverr: A Different Approach to Services
The most basic difference between Upwork versus Fiverr is fascinating. On the Upwork platform, buyers issue RFQs for projects and invite freelancers to bid on those projects. The emphasis is on jointly scoping the project and finding a freelancer with the right skills (and hourly rate) to complete the project.
Fiverr, on the other hand, is explicitly trying to “productize” services and turn them into catalogable items in an e-commerce model. As Fiverr states in its S-1:
[W]e set out to design a digital marketplace that is built with a comprehensive SKU-like services catalog and an efficient search, find and order process that mirrors a typical e-commerce transaction.
We believe our model reduces friction and uncertainties for both buyers and sellers. At the foundation of our platform lies an expansive catalog with over 200 categories of productized service listings, which we coined as Gigs®. Each Gig has a clearly defined scope, duration and price, along with buyer-generated reviews. Using either our search or navigation tools, buyers can easily find and purchase productized services, such as logo design, video creation and editing, website development and blog writing, with prices ranging from $5 to thousands of dollars. We call this the Service-as-a-Product (“SaaP”) model. Our approach fundamentally transforms the traditional freelancer staffing model into an e-commerce-like experience.
Upwork Versus Fiverr: Other Differences
There are other important differences between Upwork and Fiverr:
- By its nature and approach, Upwork targets larger projects than Fiverr
- Upwork has offerings for all sizes of clients from SMB to the enterprise. Upwork even has a managed services offering. Fiverr has a simple Gig-by-Gig approach.
- Upwork has a more complicated business model involving a freemium offering, subscription offerings with differing transaction rates for freelancers and clients. Upwork also has the concept of “connects” which freelancers buy and use to respond to RFQs. (IMHO, Upwork’s model has become too complicated.)
Upwork versus Fiverr: By the Numbers
A quick comparison of the financials between Upwork and Fiverr, shows more than simply a difference in scale and EBITDA for the two businesses:
The differences in scale, growth rate, and profitability are clear for the larger, and more established, Upwork platform. You can also see how many more small buyers and how much lower the resulting spend per buyer is on the Fiverr platform versus Upwork.
But perhaps the most interesting difference between the two platforms is the much higher take rate for Fiverr than Upwork. Fiverr is betting that its productization will add enough value for both buyers and freelancers so that it will be able to maintain a higher take rate than most marketplaces.
I love when business models collide (see here and here). These two platforms have differences that will allow them to co-exist, but they also seem destined to do battle with each other. It will be fun to watch Fiverr’s growth rate, take rate, and its journey towards profitability.