Value for Money is a race to the bottom

[charlsmcfarlane]

I worry that the value for money question will result only in a “race to the bottom” on pricing.

Here’s a possible, scenario (and I hope I’m wrong on this).

Decent sellers (who charge appropriately) will start getting bad ratings because, when prompted with a question on value for money, many buyers (even after agreeing to a price and being very happy with the result) will simply think, “well, it could have been cheaper”. This is a natural thought that most rational people will have. Of course it could be cheaper. However, that doesn’t mean it should be cheaper.

So decent sellers will start to lose business as their ratings steadily fall, so then they’ll be forced to lower their prices.

Then what? They’ll get more orders, at a lower rate and deliver work worth much more than they’re charging. However, many buyers, when asked about the value for money will still think, “well, it could have been cheaper”, because of course it could!

Now the cycle repeats and everyone’s prices are forced lower and lower.

It used to be that decent services cost more, but now decent sellers will have to undercharge or take a hit on orders as their ratings drop. This could be even more pronounced for Pro and Top Rated Sellers, seeing as buyer expectations will be even higher for them (understandably).

I do think there are times that one can get a perfect score for value for money. Getting tipped is a good indicator that a buyer thinks the service was worth more than they paid. However, this might indicate that the seller should be raising their prices, putting them at more risk of getting poorer scores for “value for money”.

I hope I’m wrong on this but I think it’s a reasonable concern. I just hope in two years time we’re not going to be in a place where everyone charges $5 for everything and has a 3.5 star average.

I think the quality of the delivery and the cost of delivery are very important measures, but they should not be measured in one rating. These should be two separate questions as they are both variables in their own right.

Edited February 13 by charlsmcfarlane

[grayprogrammerz]

15 minutes ago, charlsmcfarlane said:

I worry that the value for money question will result only in a “race to the bottom” on pricing.

Here’s a possible, scenario (and I hope I’m wrong on this).

Decent sellers (who charge appropriately) will start getting bad ratings because, when prompted with a question on value for money, many buyers (even after agreeing to a price and being very happy with the result) will simply think, “well, it could have been cheaper”. This is a natural thought that most rational people will have. Of course it could be cheaper. However, that doesn’t mean it should be cheaper.

So decent sellers will start to lose business as their ratings steadily fall, so then they’ll be forced to lower their prices.

Then what? They’ll get more orders, at a lower rate and deliver work worth much more than they’re charging. However, many buyers, when asked about the value for money will still think, “well, it could have been cheaper”, because of course it could!

Now the cycle repeats and everyone’s prices are forced lower and lower.

It used to be that decent services cost more, but now decent sellers will have to undercharge or take a hit on orders as their ratings drop. This could be even more pronounced for Pro and Top Rated Sellers, seeing as buyer expectations will be even higher for them (understandably).

I do think there are times that one can get a perfect score for value for money. Getting tipped is a good indicator that a buyer thinks the service was worth more than they paid. However, this might indicate that the seller should be raising their prices, putting them at more risk of getting poorer scores for “value for money”.

I hope I’m wrong on this but I think it’s a reasonable concern. I just hope in two years time we’re not going to be in a place where everyone charges $5 for everything and has a 3.5 star average.

I think the quality of the delivery and the cost of delivery are very important measures, but they should not be measured in one rating. These should be two separate questions as they are both variables in their own right.

It would have happened earlier, if question was only “it could have been cheaper...”

Imagine "Recommend to friend" be like "why should I recommend friend a expensive service!"

 

There's many other questions:
"Did the product profit ? If not, reason ? Is that strategy issue or due to poor product ?"

"Is there anyone other... who can understand me ? is experienced ? can do same work in same time and quality ? If yes, why I hired him, not them ?"

 

So I believe cheap buyers... will remain same as before regardless of whatever system fiverr invent 😅

Meaning of hiring TRS/PRO probably demands quality/speed ? or aren't there's a lot of $5 gigs exists already in every field ?

[sganich]

Even if they are satisfied by seller's work, buyers will be leaving low "Value for money" score, hoping that sellers will reduce their price so that they get the same work for lower price. 🙂 

 

 

[alliemadison12]

Hmm not sure about the tip part, I got a 4/5 value score the other day alongside a $90 tip 🙃 Make that make sense! Tips are a kind gesture but I charge my worth and would rather have a good rating than a tip 

[charlsmcfarlane]

15 hours ago, alliemadison12 said:

Hmm not sure about the tip part, I got a 4/5 value score the other day alongside a $90 tip 🙃 Make that make sense! Tips are a kind gesture but I charge my worth and would rather have a good rating than a tip 

So would I. To me, getting a tip implies that the buyer valued the work higher than they paid, so to get a tip and 4/5 seems to indicate the value question is broken somehow. 

[principalmike]

The new ratings system is a joke. As is often the case, Fiverr are making it harder for Sellers, especially the 'Value for Money' nonsense. Most people will not leave 5-stars for this because human nature will always say, "It could have been cheaper". As a result, our ratings will drop, and many sellers will reduce their prices, resulting in a race to the bottom. And how does this even help Fiverr? Their income will also drop as a result. Whoever came up with this idea should probably be sacked. The level of incompetence by the decision makers is absurd.

[bradymoller]

Yeah, 

I've noticed the same recently. I'm a TRS, and while I'm not the cheapest in my field, I do believe you get what you pay for. Despite above average prices, I've always had raving reviews, and roughly 60% of my clients leave a tip not only because of the quality, but the level of service I offer.

Recently, I started receiving slightly lower reviews with value for money as the main culprit. With one order, I even received a tip that equated to more than half of the actual order. But, because there's certainly other sellers that offer a cheaper alternatives, naturally the client rated lower for value for money. 

Since I'm used to receiving raving reviews, I felt this new system may jeopardize my income. As a result, I have already dropped my prices by 25% in hopes to counter this new metric. 

In short, I've already started dropping my prices because I don't see an alternative work-around around this metric at this time. I foresee this metric causing further issues as time goes on and worst case scenario, good freelancers may start leaving the platform. 

[charlsmcfarlane]

14 minutes ago, bradymoller said:

I foresee this metric causing further issues as time goes on and worst case scenario, good freelancers may start leaving the platform.

This is a real concern. If the value for money rating has the effect I’m foreseeing, it will make it so people won’t be able to make good money anymore and may just leave. As I said, I hope I’m wrong.

[principalmike]

22 hours ago, bradymoller said:

As a result, I have already dropped my prices by 25% in hopes to counter this new metric. 

Sadly, this is a likely response for many people. The crazy thing is that this will also impact Fiverr's revenue. It just doesn't make sense on any level. A change that has been poorly thought through, if at all

[hightlink]

I don't get this part of the review, people see the price of the gig before ordering, if they think it's not worth it, why don't they buy from a seller that provides the same service for a lower price?

Also, a lot of the buyers are not aware of the 20% cut or the taxes sellers must pay in their country for the earnings. Basically they rate a $50 service as expensive but the seller only ends up keeping $25 by the time they finish with all the taxes. 

 

[ahosania]

Sadly, this is a likely response for many people

[tuttitacos]

It's a tricky balance between offering competitive pricing and maintaining the quality of your services. I think you're right that there should be a distinction between the quality of the delivery and the cost of delivery.

[mark_sgp]

I think the concept of "value for money" is very relative. What one person considers "value" may be irrelevant to another, or another person may regard it as "lack of value".  Then we bring into the equation "managing buyer expectations" and cross-cultural nuances that may result in misunderstanding and different perspectives on what "value for money" really is -- not to mention the more difficult clients which are hard to please. 

It paints a very messy picture, in my opinion, unless there is widespread consensus and clear definition of how "value for money" is defined...and delivered.

[emmaki]

It's pretty simple, chaps. Work with businesses and make sure they get good ROI for whatever it is that you do, whether that is tangible or intangible.

Copywriters can charge tens of thousands of dollars for one sales page if they can demonstrate that their copy leads to hundreds of thousands of dollars in revenue, to give one example of value for money - and often, those copywriters aren't on Fiverr because their contracts will usually include revenue share, which of course Fiverr doesn't offer.

The problem is that Fiverr lost 200,000 buyers last year. We don't know why (I suspect undisclosed AI as well as generalized poor experiences with bad sellers) and is now targeting buyers who spend more, not less. That means there are less orders to go around and Fiverr is looking for sellers who can charge big bucks and satisfy their customers despite the big bucks.

This also seems to play into the success score. You're judged by how other sellers in your niche are performing as well as you. If you want an improved success score, put your prices up, deliver value on that price, and you'll be fine. It doesn't matter if you sell 100 $5 gigs with great everything if someone else is selling the same service 2 times for $500 and getting equally good scores.

tl;dr make fiverr more money with less headaches. They're not going to change course on this, and to be honest, it doesn't take much to deliver a good, openly disclosed AI service that will snip out VFM issues and also put you on a fast track to TRS and bigger paydays. Does the way that Fiverr has gone about everything suck? Yes, absolutely. I don't think the platform should be rewarded at all for its approach to business at the moment (it is actively breaking EU law wrt to clear pricing for Seller Plus members who will see a price increase from May at this moment). But this is still a place of opportunity.

Fiverr will not be concerned about a bunch of sellers and buyers leaving because the prices are going up. If the prices are going up enough, it doesn't matter that low quality sellers and buyers leave. The overall marketplace is elevated and makes more money. In theory.

 

[donnovan86]

4 hours ago, emmaki said:

We don't know why (I suspect undisclosed AI as well as generalized poor experiences with bad sellers)

AI is definitely a major part. I have many people contacting me that have website content and articles written by AI, and they have problems ranking that website or having any meaningful visits. So it's clear many thought using AI to write stuff will save them money.. and I can see why they lost a lot of buyers. I was expecting more.

[emmaki]

2 hours ago, donnovan86 said:

I have many people contacting me that have website content and articles written by AI, and they have problems ranking that website or having any meaningful visits. So it's clear many thought using AI to write stuff will save them money.. and I can see why they lost a lot of buyers. I was expecting more.

That's not such a bit problem - it's normal to experiment with new technology and figure out whether it's for you or not. What isn't normal and what shouldn't be allowed is for sellers to sell AI products without disclosure. Those buyers are paying for what they think is human writing and getting AI content that they may not realize is AI until one day they noticed that Google has locked their site out of the search results.

Yes, buyers need to do due diligence, but Fiverr is pushing prices up without taking enough care to make sure that the sellers are actually offering services that are worth the price (i.e. not junk). The SS seems to be the "solution" to this, but it really isn't. Every so often, Fiverr has a PR crisis. I will not be surprised if AI is at the heart of the next one.

[donnovan86]

12 hours ago, emmaki said:

What isn't normal and what shouldn't be allowed is for sellers to sell AI products without disclosure.

Which a lot of people do, including that seller we talked about a while ago.  Also, this diminishes the quality of our work, since those sellers end up churning 20x our output in way less time. How can you compete with that. And even if buyers perform due dilligence, you can only do so much. Few people do the research we did regarding that seller or any other seller. They just see the reviews, see there's a lot of positivity and that's it. 

[charlsmcfarlane]

On 4/26/2024 at 1:43 PM, emmaki said:

If you want an improved success score, put your prices up, deliver value on that price, and you'll be fine

I have noticed that this seems to be true. I’ve seen a hit on “Value of Delivery” (I think everyone has), but it’s been a small impact, really.

Almost every review I’ve had has been between 4.7 and 5 stars, so that’s ok. I am lucky enough to work with a lot of buyers who are willing to pay for quality, rather than worrying about the cost.

It seems counterintuitive at first, but charging more seems to improve this metric (unless the service being delivered is rubbish, of course)

[emmaki]

12 minutes ago, charlsmcfarlane said:

It seems counterintuitive at first, but charging more seems to improve this metric (unless the service being delivered is rubbish, of course)

Clients with bigger budgets do tend to be a lot easier to work with, especially if they're not spending their money but their business' money. So long as the work is competent (or exceptional), there's little reason for value for money to be marked down.

Putting prices up also discourages personal project people from considering you. I have nothing against them or their projects, but typically they will be emotionally invested in their project, not especially good at working with freelancers, and have very skewered expectations as a combination of those two factors. 

Effective communication is another one. I see a lot of advice that the way to improve this is more communication (especially on Reddit). I remember one person recommending daily updates with Zoom video meetings to ensure "everyone was on the same page". In theory, yeah, that sounds effective, Until you remember that people are busy, and that there are better, briefer ways to communicate daily updates that respect people's time. 

I also see advice that you should "wait" to deliver from so-called experts, all of whom are seemingly blissfully unaware that the SS rewards faster deliveries (and by extension, more realistic delivery times; if people want to manipulate that metric, that's how you do it. Of course, you can only manipulate it so much before your stated time becomes unattractive...)

Ultimately, I think the SS is game-able. Just not in the way that the people who like to game things usually game them. I must say, I find it amusing that people are pausing gigs to "improve their score". I do not think that is a smart move, because the system needs data points: I don't know if the SS metrics expire, but we'll find out pretty soon.