In case you are not familiar with freelance job portals take a look at this promotional video created by peopleperhour.com (PPH):

When I began my freelance career around 18 months ago I must confess; I was hooked on freelance job websites like peopleperhour.com and freelancer.com. I scoured both sites tirelessly, always bidding on projects which I considered to be inline with my abilities and would bring with it the added benefit of a long-term business contact which can provide future work and even client referrals.

The premise of these types of websites, as explained in the PPH video above, is great in theory. It offers a lot of potential work to freelancers, with multiple job postings every day; it also offers the client their pick of skilled freelancers. At least, that’s what it says on the tin...

This is what I began to notice as I delved further into the types of projects that were (and still are) being posted on PPH.

I would be more than happy to set up an OSCommerce store but I won’t do it for £40. Let me rephrase that – I can’t do it for £40; the communication time alone would eat up that fee and more.

This seems to be the fundamental flaw in portals like PPH. Quite simply, there are too many clients whom are either vastly misinformed as to what a real budget should be, or they are just looking for the cheapest service they can find.

The problem is exaggerated out of all proportion when you realise that freelancers are actually bidding on these low-value projects – the example above received 3 bids at time of writing (there are more extreme examples).

I understand that there are younger bidders out there looking to break into the industry and there are eastern providers who generally charge a lot less than their western counterparts, but let us be honest for a moment, the issue in this case is the ignorance of the client. They want to build a (presumably successful) online business on a budget of £40-£100; you do not need a degree in marketing to realise that this just isn’t adequate.

But haven’t clients always had a misconception of cost? Yes, and in real-life circumstances the providers have always been there to guide them. In this instance however, that responsibility is in the hands of PPH (the middleman in this transaction).

Education is the answer

It goes without saying that if there are scraps to be had, the pigeons will swarm. I can confess to taking on projects with embarrassingly low budgets at the beginning, purely because I was too afraid to say no (we all have rent to pay).

I am going to place the blame in the hands of PPH because they advocate these transactions which fuels the blaze of ignorance that many clients still have toward the internet as a whole.

I believe PPH et al should offer some genuine guidance to their clients when posting a job. Recently, it became free to post jobs, which makes it even easier to post flippant, ill-thought out projects - great for the client, not so great for the providers.

At the moment the system is designed to process transactions with as little Human input as possible - think of it as an automated middleman. Sadly this system is not working as too much ‘guff’ is slipping through the net.

I would like to see PPH put an emphasis on quality - quality clients and quality providers. By putting clients through a more structured, and querying process, the website could intuitively assess their requirements and suggest realistic targets.

The exact same process should be applied to providers; designers, developers, writers, artworkers should all be carefully cross-examined before being allowed to bid on a project. Essentially, the provider registration should be a LOT more formal.

Taking this approach would massively streamline PPH as a platform. It would trim the fat.

There are multiple incentives at the moment for providers – packages that offer variable commission rates and bid credits, but this is completely nil of value when you look at the jobs on offer here. However, should PPH become a high quality source where clients and providers truly understand the projects, you have something that I and countless others would be willing to pay for.

I contacted PeoplePerHour to get their thoughts on what has been written so far, I have made comments where I feel they were appropriate. These are highlighted in blue where PPH is highlighted in green.

Note: this correspondence has not been edited in any way barring the colour changes:

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From: Xenios Thrasyvoulou of peopleperhour.com

Hi Matt

Thanks for sending this.
I do have some objections to the content that id like to raise.

Firstly, we are not a ‘middleman’ .. A middleman traditionally is someone who ‘takes a view’ and ‘consults’ the client on the service provided to justify their fee. They are effectively a broker.. In this case like a recruiter.  These are exactly the type of professionals we are displacing with a more transparent and objective system. A middleman is normally biased as a recruiter is .. We do not take a biased view: we provide information to allow the  client  to take an informed decision on their own (by showing numerous metrics like detailed client feedback, scoring across a number of soft and hard criteria, earning, relevance, experience, objective tests taken  etc). There is a very big difference

A middle man is a third party that (generally) profits from the transaction which he/she oversees. From where I am standing, this is what PPH does. I understand that PPH provides reporting metrics on these transactions but this does not, strictly speaking, make PPH anything other than a middleman.

Secondly, to your argument of misinforming clients : I cannot see how you get to this conclusion. Again following from the point above: we do not consult or take a view as ‘price setter’ . We allow the client in fact to view other similar jobs to theirs and what they were awarded for before setting a budget and in fact by doing so if anything we help educate them on market prices. You might disagree with those prices – you may also find people in the computer industry who disagree that a PC should sell for as little as £400 these days.. But it does! And people like you and me benefit from that and so does the ecosystem at large. You must distinguish between marketplace price-setting where the price is set by the natural forces of supply and demand, versus artificial  price setting which has proven not to work in most industries around the world.   Prices on our site are set by supply and demand.

I would not accuse PPH of misinforming clients; I would accuse them of not informing them enough. Allowing clients to see similar jobs and how much the final bid went for is, in itself, producing a cycle of low-value work. If a client requires an SEO provider but has no idea of budget, a similar project awarded at £100/month is not going to educate them any further; it’s going to mislead them on perceived value.

Thirdly, I think if you look at the data you will find that – contrary to your (somewhat common) belief – we in fact help push prices up. The reality is that most people who come to our site don’t know what price most of these services sell for. Just like if you’ve never bought a car you cant really know how much car insurance costs! If you’ve never designed a logo you cant know what a reasonable price for that is.  Our site serves to educate those users – not with our own biased view –but with that of the professionals doing the service.

The analogies stated here are completely true and I can empathise with client ignorance. However, the very platform that is PPH does not seem to push prices up because bidders are all fighting against one another over budget. Why would a client choose a sensible and realistic bid when they are tempted by so many lower offerings? If they are ignorant to the work involved, there is a strong possibility that they will opt for the lower bids on this merit alone.

The data in our PPH Economy  https://www.peopleperhour.com/pph_economy.php  reveals that – which is why we show it the everyone – we have nothing to hide. Scroll down and you’ll see

• 93% of jobs get awarded to bidders who are not the cheapest / lowest bidder
• 88% get awarded to those with the highest feedback – so clearly quality is rated over price
• despite having freelancers from all over the world including low cost countries like India and Pakistan almost 78% of bids get awarded to UK freelancers , showing that in fact the client values locality and proximity more than price (even though 95% of the work done is done remotely)

Fourth – I think the ‘client budget’ is vastly misunderstood. That’s a desired price from someone who may not have a clue what the market price is.. How many times do you get asked by a shopkeeper say when you walk in what your budget is ? How many of those times is it accurate? You may say you have a budget of £200 for a TV (partly may be because you think by saying that you wont be taken for a ride and ripped off) ..but quite possibly you end up paying £500 ! And a moth later you think you got great value. You cant expect consumers to know the price of everything and you cant penalise or criticise them for being wrong.

This sounds like confusion between product and service. In this industry, a quality product is very important but a good service is absolutely crucial, especially if you are entrusting a remote bidder. It is also worth once again stating that educating the client helps to alleviate the issue of “desired price from someone who may not have a clue what the market price is”. Unfortunately, once the client has  posted their project, very little can be done.

To this point:  the above analogy happens A LOT on our site. Ie a client accepts a bid above their budget.  But it only happens in cases where the freelancer – rather than taking the negative view and getting fixated on the budget (which in the analogy above a good TV salesman wouldn’t do ) instead they focus on explaining to the client what the realistic price is and substantiating it.. And then they win the work.
Which proves the point.

Again if we were taking the view on what the price ‘ought ‘ to be then we could be criticised, but we don’t. In fact we limit the bidding to be only 20% max below the budget so if anything we prevent from price spiralling down. And besides, what most people  forget is we have no incentive at all to drive price down. We make a % fee so clearly if the bids are higher we make more money.. But we must not do that artificially.. We must maintain our integrity as a marketplace whereby we let the forces of supply and demand dictate the price, which is what we do

I hope this helps and makes sense to you. Feel free to contact me if you wish. Happy to have a chat.   

Kind Regards

Xenios

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I would like to thank Xenios for his response to this article.

From his explanation of PPH as a service and a business I cannot help but partly agree that the company is doing its best to maintain integrity. The systems in place here seem to work well in servicing both the client and provider.

But with websites like PPH comes entirely new territory. Xenios himself refers to PPH as a “marketplace”. My perception of a marketplace is a busy platform of low-cost and easily forgotten transactions, and in this particular industry I just don’t think that works as well as it sets out to.

What do you think? Are websites like PPH helpful or damaging? Have you used a jobs portal before? Leave your thoughts in the comments!