How does Fiverr work? A detailed explanation.

What is Fiverr?

Fiverr is an online marketplace where business owners can find and hire freelancers across the world for a variety of gigs that align with their budget and specifications. It is an easy to use platform that helps freelancers find paid projects that match with their skillset. Fiverr brings some sort of order to the online gig economy by minimizing spam and allowing for both buyers and sellers to come to a mutually beneficial agreement.

For example, a real estate agency in California needs a bunch of resources to expand its online footprint. They need content in the form of text, images, videos, etc. They also need to promote content to relevant audiences to drive sales. This business can source all the talent it needs from Fiverr. They might pick someone from Pakistan to design their logo, Dallas to write their content, Paris to translate content to French, and Bangalore to manage their website.

The agency can hire different Fiverr freelancers to get their job done or hire another agency on Fiverr to manage their online presence – any permutation works!

Fiverr also acts as a safe payment portal and an escrow. Both businesses and freelancers can trust Fiverr with their money.

Fiverr got its name from the $5 bill. During its inception in 2010 in Tel Aviv, Israel, the idea was to provide services to business owners with the minimum cost being $5. Though the economy has changed and $5 doesn’t have the same value, the name – Fiverr – sticks. This is to suggest to its users that the platform stays affordable even after all these years.

Fiverr Terminology

Before we dive into Fiverr’s modus operandi, we need to understand a few terms. We will be using them frequently in the subsequent sections.


Every Fiverr transaction has two entities – a Buyer and a Seller. Buyer is the business owner. This entity brings money to the table. Buyer has a business requirement that they want to meet through services from a seller.


Seller is the freelancer who brings services to the table. They provide buyers customized deliverables that align with buyers’ budget and requirements. The seller is required to work on the quality of the product till the buyer is happy.


Gig is the name of the service that the seller provides. For instance, a buyer who is looking for a writer in the nutrition niche would search for a gig from sellers who specialize in that.


After the buyer feels satisfied with a seller’s gig description, they place an order with the seller with specifications on agreed budget, deadline, etc.


Fiverr charges a commission from both the buyer and the seller for facilitating the transaction. Fiverr mostly has fixed commission rates, irrespective of the transaction amount.

How does Fiverr work?

Fiverr transaction starts with the buyer finalizing a seller and paying Fiverr a sum of money that includes sellers charges, sellers commission, and buyers commission. Fiverr next acts as an escrow by retaining funds supplied by the buyer and releasing to the seller only after the buyer is satisfied with the delivery.

how fiverr works

Here’s the complete step-by-step process of a Fiverr transaction in work:

1. Buyer finds the right talent, reaches out to them, and decides to place an order with them.

2. Next, the buyer initiates the workflow by paying Fiverr the amount agreed with the seller, plus a 5% service fee (minimum being $2).

3. As soon as that’s done, Fiverr activates the timer and the order is on.

4. After the freelancer delivers the order, Fiverr waits for the buyer to review the order.

5. Finally, after the buyer approves, Fiverr closes the order and releases the funds to the seller, after keeping a 20% commission.

How does Fiverr work for buyers?

Fiverr acts as a platform for finding talent. Buyers can search for freelancers either by using the search bar or posting a request. Once they finalize the right talent for their requirement, they can place an order with them in a single click by paying Fiverr the complete amount along with a 5% service charge.

Post that, Fiverr tells the freelancers that the order is on along with the deadline. After the delivery, Fiverr informs the buyer about it and asks for a review. The buyer has an option to approve the order or send it back for rework.

After the order is finally approved, Fiverr closes the order by releasing the funds to the seller.

How does Fiverr work for freelancers?

Freelancers can find decent work on Fiverr. Since many buyers are there to buy cheap gigs, Fiverr may not be the best place for established freelancers but it’s a great platform for beginners who are yet to build a portfolio.

Here’s how Fiverr works for freelancers:

  1. Freelancers can create gigs on Fiverr to attract buyers. These gigs must be optimized for Fiverr SEO to ensure that it reaches more buyers. 
  2. It’s ideal that freelancers include quality gig images to increase the appeal and attract more clicks. The idea is that the more people click on your gig and read the description, the more will place an order.
  3. Sellers also need to write a stellar profile description to ensure that their skills and experience is highlighted well – just in case a buyer visits that page.
  4. By ensuring smooth communication with buyers and timely delivery, freelancers can build their reputation. Eventually, they evolve to become Level 1 or higher level sellers and can charge a higher price. This will attract a better buyer base which will improve their hourly payment.
  5. After completion of each order, Fiverr will pay the sellers 80% of what was agreed with the buyer. So if you, as a seller, agreed for a $50 gig, you will be paid $40 as Fiver takes a 20% commission.

How does Fiverr work for beginners?

Fiverr can be a great platform if you are just starting freelancing. It will help you get gigs fast if you promote your gig well. It will gradually build your portfolio and teach you how to communicate with buyers. Both are essential once you exit Fiverr to target high paying clients.

Beginners have to struggle on the platform for a bit though. It’s a struggle to find buyers who pay as per industry standards because they expect to find cheap gigs on Fiverr. You may have to serve clients who make you feel like you’re being ripped off. 

Your first 5-6 gigs will sell super-cheap, even if you have a good experience and portfolio outside Fiverr. If you already have a good reputation outside Fiverr, you should apply for a Fiverr pro profile.


How does payment work in Fiverr?

Payment on Fiverr is super-simple. It starts with the buyer paying the full amount to Fiverr, immediately after finalizing a gig. The amount includes the actually money that gets paid to the seller, the 5% cut from the buyer, and a 20% cut from the seller. 

For example, if a gig costs $100. The buyer will pay $105 = $80 (that goes to the seller) + $20 (Fiverr’s cut from the seller’s side) + $5 (Fiverr’s cut from the buyer’s side).

Both buyers and sellers can use different modes of payment – based on the country of their origin. You can learn more about the Fiverr payment system here.

Anurag Surya
Anurag Surya

B2B Saas | Content Marketer | SEO Specialist
My SEO strategies prioritize building human-to-human connections, resulting in longer-lasting client relationships.


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