There are plenty of ways for you to earn some extra cash these days — online surveys, selling your junk online, buying and flipping used items in person, etc. But if none of those appeal to you, then maybe creating something for others will do the trick.
That's what many people have done with sites like Fiverr and Gigbucks that allow users to sell their services or products (or both) at an incredibly low price point. The site is known mostly among tech-savvy folks who know how to use it properly, but does this platform work as a means to actually make money? Or even just provide value?
To find out, I spoke with several financial experts about whether Fiverr can be considered an investment opportunity or a way to get rich quick scheme. Here’s what they told me.
"It depends," said Chris Pogue, author of "The Money Book for Young Fabulous & Broke." He added that while he considers Fiverr itself a worthwhile resource, there are other options available for earning income without paying any fees yourself.
Pogue mentioned Udemy courses which offer a range of different topics and specialties such as coding, photography, writing, marketing, design, etc., all taught by professionals. And because most of them require payment upfront, Udemy has become popular amongst students who want to pay off school loans early.
"While the market may not need another 'Photography for Beginners' class right now, learning new skills through video lessons is definitely worth considering," he continued.
Andrea Woroch, CFP® and founder of Andrea Woroch Wealth Management agrees with Pogue's assessment. She noted that Fiverr is often viewed as a place where people go to learn more about certain things, rather than a legitimate source of revenue for individuals looking to start their very own businesses.
She also pointed out that when trying to decide if investing in stocks is right for you, one important question is “how much time am I willing to devote to researching companies?” That same logic applies here. If you're already busy enough making ends meet, perhaps using Fiverr isn't going to cut it.
Woroch explained that she would advise against purchasing shares in private companies unless someone was actively involved in managing its operations. In addition to finding information, investors should look into companies that generate stable, predictable streams of profits instead of ones that might crash unexpectedly.
"If we were talking about real estate investments, this wouldn’t apply since property values tend to rise consistently year after year regardless of economic fluctuations," she clarified.
So why did I bother asking about Fiverr specifically? Well, because there are so many similar platforms offering essentially the same thing. So how exactly does Fiverr stand apart from competitors, assuming it stands apart at all?
Catherine Ocasio, head of research at S&P Global Market Intelligence agreed with Woroch's opinion that private companies aren't usually ideal long term investment candidates. However, she believes that Fiverr falls under the latter category.
Ocasio explains that unlike publically traded corporations, private companies don't enjoy the benefit of having to report quarterly earnings, nor must they adhere to strict accounting standards. Instead, they only need to disclose major events like layoffs and bankruptcy filings. As such, Ocasio says this allows them to operate below the radar until disaster strikes.
In comparison, publicly held companies are required to regularly release reports detailing their finances and performance, which could help potential buyers assess risk before putting their money down.
According to Ocasio, Fiverr is best known for being a great tool for freelancers seeking clients, especially due to its reputation. While she acknowledges that the company has experienced growing pains, she still thinks that its future looks promising.
"We believe [the] combination of large freelance base and diversification across industries creates room for growth opportunities within the gig economy," she said.
Although there are plenty of reasons to steer clear of Fiverr, there are also compelling arguments supporting ownership. After speaking with numerous analysts, however, my gut feeling remains unchanged.
I'm convinced that once you factor in the aforementioned downsides, there simply isn't anything positive to say about owning this particular share. And I'd probably feel similarly if I hadn't been burned in the last few months.
But let me explain myself further.
On Sept. 29, 2019, Fiverr announced that the Securities Exchange Commission had opened an investigation into the company regarding possible violations related to disclosure requirements involving the sale of securities. On Oct. 2, CNBC reported that former employees claimed the company misreported revenues during 2018 and 2017, respectively. Two weeks later, Business Insider published a separate story alleging that executives engaged in illegal activity including fraud, embezzlement, and self-dealing.
These accusations come amid additional claims that the company pressured sellers to sign up customers via third party apps, resulting in inflated prices. According to a recent article from TechCrunch, data analytics firm Visier found that Fiverr charged double the amount per customer compared to comparable third parties. Additionally, according to a Wall Street Journal piece written shortly afterwards, customers on average spend less than $5 per order compared to around $25 per purchase elsewhere.
As a result, the stock fell sharply. Since then, it's fluctuated between roughly $0.90 cents and $1.50 depending on the day. For reference, Google closed Thursday trading at roughly $967.30, meaning it's currently 82 percent lower than it was just three years ago.
This paints a pretty dismal picture. Even though most analysts predict the situation will eventually improve, the fact is that it hasn't yet. This is precisely why I think it's better to wait and see before getting too excited about the possibility of becoming wealthy overnight.
Of course, these issues shouldn't dissuade anyone from exploring alternatives to traditional job positions altogether. There are always free tools like Upwork that facilitate transactions and connections between freelancers and clients. You'll never know if working for yourself is truly profitable until you try, but I've seen first hand that it doesn't necessarily give back either.
Online marketplaces are the new way of doing things in today's digital economy. They allow you to sell your goods or services at any price that you want, without worrying about how high prices will go up when demand grows too large for supply. The most popular examples include eBay, Facebook Marketplace (formerly known as MTurk), Uber Eats, Amazon Local, Etsy, etc...
In fact, we could say that all online markets work similarly because they're built around two main principles: 1) No seller can set their own price, and 2) All sellers must pay an equal cut of profits based on what customers decide to buy. This means that if you have something valuable but no one wants to pay for it, then someone else will eventually find a buyer. And if there isn't enough people buying it, then nobody gets paid.
The same concept applies with freelancing platforms like Upwork, Freelancer, People Per Hour, Guru, 99Designs, etc... In these cases, however, instead of selling physical products, users need to offer freelance services such as web development, programming, marketing, writing, translation, design, consulting, photography, videography, audio editing, graphic designing, SEO/SEM, social media management, video production, animation, logo creation, event planning, data analysis, customer support, project management, website maintenance, app development, product launches, advertising campaigns, etc..
As more and more people start using those websites, some of them began offering premium features for free while others started charging small monthly subscription plans. Some even turned into full-fledged companies with multiple employees.
One example would be Fiverr, which has been operating since 2011 under its current name. If you haven't heard about it yet, here's everything you should know about this platform.
According to Fiverr’s official terms, 100% of transactions made by both parties involved in the process come directly out of buyers' pockets. However, every time you use the site, you'll see banners telling you that Fiverr takes 20% of each sale. That said, don't get confused between "transaction fee" and "service fee." These aren't necessarily the same thing.
A transaction fee is simply the amount that Fiverr charges for facilitating payments between buyers and sellers. On the other hand, a service fee refers to the part taken by Fiverr after deducting payment processing costs. As mentioned above, Fiverr also takes 10 percent of transaction fees regardless whether it sells anything or not.
This is why many people consider Fiverr to be a scam. Not only do you end up paying extra taxes but you might also feel cheated because the company doesn't give you access to the final price until after you've already put down your credit card.
However, Fiverr offers a limited number of ways to save on transaction fees so that you won't notice it as much. For starters, you can choose to receive your order via PayPal rather than bank transfer. You can also pick whether to send your item through standard shipping or expedited delivery. Lastly, you may opt to skip having Fiverr handle returns altogether and ship items straight back to the sender.
On the other side, Fiverr's service fee depends on several factors. First off, you'll probably pay less if you purchase certain types of orders over others. Such as bulk orders, rush orders, special orders, gift cards, group purchases, and packages ordered together. Secondly, you'll pay more if you request custom designs, require quotes before placing an order, or provide feedback. Thirdly, Fiverr takes a bigger chunk of your earnings if you live outside US territory. Fourthly, if you're just starting out, you'll pay higher service fees compared to seasoned professionals. Finally, if you try to bypass the system by manually sending funds to vendors, you'd certainly end up shelling out more money due to fraud prevention measures.
Overall though, Fiverr seems trustworthy considering that almost everyone who uses the platform enjoys positive experiences. Even big brands like Microsoft, Nike, Samsung, Disney+ among others rely on Fiverr to promote their latest projects, merchandise, apps, games, and services. Just Google "promote my brand" and you'll discover hundreds of results where companies advertise themselves on Fiverr.
Aside from its regular service fee, Fiverr charges two additional fees depending on whether you're ordering a physical good or service. Here's a breakdown of Fiverr pricing structures according to the type of item you wish to procure.
If you are looking to place an individual advertisement, you'll pay $1.99 per month ($24.98 annually). Likewise, if you wish to post unlimited ads, you'll need to subscribe to Premium Pro for $29.97 per year ($3.96 monthly). Subscriptions renew automatically unless canceled beforehand.
Lastly, if you want to list multiple jobs at once, you can either sign up for Regular Plus for $19.99 yearly ($2.75 monthly) or Elite Plan for $49.99 yearly ($6.25 monthly). Both options promise better visibility within job categories, more exposure for listings, priority review, increased trustworthiness, and faster response times.
Yes! Like I stated earlier, Fiverr works exactly the same way as sites like Craigslist, Gumtree, Offerup, etc., i.e. you bid for specific gigs posted by various employers. So technically speaking, yes, anyone can earn money on Fiverr. But the question now becomes: How long does it take to become profitable?
First of all, let me clarify that there are legitimate opportunities on Fiverr. There are thousands of active profiles across different categories ranging from fashion & accessories, makeup & cosmetics, food & drinks, health & fitness, home decor, electronics, tech gadgets, travel deals, music instruments, pets, vehicles, sports & outdoors, events, weddings, funerals, and plenty more.
It really boils down to personal preference. Although a lot of sellers on the site struggle to make ends meet, there are still plenty of success stories too. A quick search reveals countless accounts earning six figures, seven figures, eight figures, nine figures, ten figures, eleven figures, twelve figures, thirteen figures, fourteen figures, fifteen figures, sixteen figures, seventeen figures, eighteen figures, nineteen figures, twenty figures, thirty figures, forty figures, fifty figures, sixty figures, seventy figures, eighty figures, ninety figures, hundred figures, and thousands upon thousands more.
But keep in mind that Fiverr doesn't guarantee real income growth. Your ability to generate revenue completely hinges on your experience level, talent, skill, competitiveness, and overall professionalism. So if you're just starting out, you shouldn't expect to make millions overnight.
While it varies from case to case, Fiverr's average commission rates range anywhere between 15-30%. The best performers usually earn 30%-50%, while the worst ones make below 5%. Generally speaking, if you're able to deliver quality outputs, you'll likely reap rewards sooner rather than later.
So how did Fiverr reach profitability? Well, aside from providing exceptional value propositions, the company has managed to achieve profitability through three major strategies.
Firstly, Fiverr provides excellent customer support. Its 24/7 help desk allows clients to contact independent contractors whenever necessary. Additionally, the company employs a team of specialists whose sole purpose is to assist sellers with technical issues. Lastly, Fiverr lets sellers connect with potential investors on LinkedIn and recruiters on AngelList.
Secondly, Fiverr promotes trustworthiness amongst vendors and buyers alike. With more than 4 million registered members worldwide, the company prides itself on its reliability and honesty. Furthermore, Fiverr regularly conducts third party audits to ensure compliance with industry standards including anti-discrimination laws.
Finally, Fiverr focuses heavily on recurring revenues. Aside from transaction fees, the company earns significant amounts of profit from recurring commissions earned from subscription models. According to Fiverr's internal research, nearly 53% of buyers spend more than $5 on the site per month. Meanwhile, 21% of subscribers buy more than $10 worth of goods monthly. By 2021, Fiverr estimates that annual subscription fees alone will exceed $200 billion.
Although Fiverr might seem intimidating at first glance, you can rest assured knowing that you'll never run short of prospects willing to shell out substantial sums of cash for top notch services.
When you're looking for someone online to help with your research project or create an infographic for you, how do you know who's trustworthy? You might be tempted to use services like Upwork that charge higher rates than other marketplaces in order to get the best talent available. But what if there was another option where the buyer pays the seller directly instead of paying middlemen through "gig" transactions?
That's exactly what many people are asking about when it comes to popular website FIVERR.com. Does this platform actually pay its members anything at all? And what happens to those gigs once they're complete? Here we'll explore everything you need to know about whether Fiverr is legit, and how it works.
In 2019, Forbes estimated Fiverr earned $60 million dollars per year — but not all of that came from selling ads. In fact, only 10 percent of their revenue came from ad buys. The vast majority (90%) of Fiverr’s income came from two sources: Service Fees and Transaction Fees.
Service Fees are paid by buyers whenever they pay for a gig on Fiverr. These can range anywhere between 5 cents and 25 dollars depending on what type of job you want done and which category you choose. For example, let's say you hire someone on Fiverr to write a short story for you. If you pay $25 for that particular writer, then Fiverr will take 20% of that fee ($5) straight out of your payment. This means that Fiverr keeps 80% of any payments made to them via the site.
Transaction Fees work similarly to service fees, except they apply to purchases. Let's say you buy a book from one of Fiverr's writers. When you purchase something using Fiverr, you end up getting charged a small percentage of your total bill. So if you purchased a copy of A Wrinkle in Time from Amazon for $8.99, Fiverr would add 2.9% onto the final price of $10.98 to cover commissions and fees.
The company also takes a cut of every subscription sale too. According to Business Insider, Fiverr took 3% of monthly recurring subscribers' subscriptions in 2018. That translates into around 9% taken off each individual item sold by creators.
So why aren't more users upset over these high commission charges? Well, some folks argue that Fiverr isn't making enough money because most of their content consists of low-quality photos, memes, and jokes that don't require much effort from the user. Others believe that since Fiverr doesn't have any employees, the company has no obligation whatsoever to pay workers fairly.
However, while Fiverr may earn less overall compared to companies like Facebook and Google, the platform reportedly earns far more than its competitors UpWork and PeoplePerHour due to its strict vetting process and support system.
Unfortunately, Fiverr hasn't released specific figures regarding how much it makes per member or per transaction. However, based on data gathered during a recent investigation, the Wall Street Journal found that the average hourly rate on the platform ranges between $13 and $15 per hour. On top of that, a full-time employee working on the platform could potentially earn upwards of $50,000 annually.
If true, that number seems incredibly generous considering that many freelance jobs on sites like Upwork typically offer lower compensation packages. To put things in perspective, according to Glassdoor, the lowest starting salary offered on the site is just above $12/hour.
As mentioned earlier, Fiverr's earnings come primarily from three areas: advertising, transaction, and subscription fees. While the exact breakdown varies slightly among different countries, here's how Fiverr splits its profits across the board:
40 % Advertising & Marketing Fee - This includes both direct costs associated with running ads on the platform, as well as indirect marketing efforts like brand partnerships.
30% Transaction Fee - As noted before, this applies to all items bought and sold on the site.
30% Subscription Fee - This applies to all new customers who sign up for a plan after April 1st, 2021. Customers already signed up prior to this date won't see this increase.
20% Staff Fee - This covers administrative expenses such as payroll taxes.
According to CNBC, Fiverr currently employs roughly 400 individuals, including 100 staff accountants. Many of these positions were recently filled following the COVID pandemic.
While Fiverr still relies mostly on advertising to generate revenue, the company plans to change its focus in late 2020. Instead of focusing solely on digital display ads, the company wants to start offering video production services to advertisers.
This shift away from digital media follows similar moves by other platforms like Instagram and TikTok. Meanwhile, big names like Facebook continue to build out their own advertising businesses.
But even though Fiverr's future looks promising, critics worry that changing directions so soon after launching could hurt the platform's longterm success. After all, Fiverr didn't launch without any competition. Other websites that allow freelancers to sell goods and services had been steadily gaining popularity throughout 2014 and 2015.
For instance, Etsy launched back in 2005, and it allows artists to sell crafts and homemade products on the same platform used by consumers to find clothing, accessories, home decor, etc. Since 2017, however, the company has seen massive growth thanks to a variety of initiatives aimed at boosting its ecommerce offerings.
Etsy now boasts millions of shoppers worldwide, and it recently partnered with Walmart to bring free shipping and returns to certain orders. Plus, the company introduced a feature called Shopify Stores, allowing sellers to open physical retail stores right within the app itself.
On the other hand, Venmo launched in 2011, but it wasn't until 2016 that the company began charging merchants a flat 15% fee. Before that point, Venmo allowed users to send cash transfers to friends and family for absolutely zero cost.
Many analysts predict that the next step toward monetizing the platform involves introducing a membership program to encourage repeat visits, boost retention, and attract additional advertisers.
Since Fiverr requires that sellers verify themselves first, the company verifies that all profiles submitted meet several criteria. Once verified, a seller becomes eligible to receive payment from potential clients.
Sellers must agree to post quality images and deliverables per client requests. They must also provide accurate information, background checks, references, social proof, and other necessary materials. Finally, reviewers assess the legitimacy of a profile, determine the level of skill required for the assignment, communicate clearly, and set expectations accordingly.
Once reviewers give feedback, the reviewer chooses to either keep the customer happy (i.e., mark the review positive), leave it neutral, or reject the request altogether. Reviews marked negative tend to result in refunds.
Due to the nature of our current society, some people try to game the system by creating multiple accounts, buying cheap stuff, and leaving reviews under false pretenses. Sellers also sometimes submit fake testimonials designed to impress prospective buyers.
To prevent fraud, Fiverr uses third parties to monitor reviews left on profiles. Any reviews rated negatively by third party monitors are removed automatically from profiles. Additionally, Fiverr prohibits anyone from submitting fraudulent reviews unless they specifically contact the team behind the product.
Finally, Fiverr provides tools to protect sellers against bad actors. Reviewers are able to flag profiles that seem suspicious and report violations to the proper authorities.
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