These sites work a bit like eBay. When you buy a product on eBay, (if you are smart) you check the seller's rating. You will see what % of buyers have complaints. You will see how many products the seller has shipped. You will not likely take a chance on a seller that has sold few or no products, and so has no rating.
Most of the freelance sites have a similar rating system. Buyers will check how many projects a worker has completed, and how happy the buyers were with the outcome.
Now, what if you are just starting out? How to you accumulate a rating, and how do you attract the first client?
You might think that you can post your resume, post a link to your LinkedIn, post links to completed projects that you've done outside of the freelance site. Post references, testimonials from clients.
NO. NOT ALLOWED. They will delete your account for that! You aren't allowed to post that sort of information, nor communicate it to potential clients in any way.
You have to play within their walled garden! They want to lock you in to THEIR site. Your real-world experience MEANS NOTHING starting out!
As a practicality, then, the only way to get started is to discount deeply. Then somebody will take a chance on you, and you can accumulate rating.
There are many people in third-world countries willing to do a considerable amount of work at deeply-discounted rates for the chance at market-rate work in the future. Many of the freelance sites are set-up to exploit these workers by imposing this "walled garden" system and not allowing outside references.
There will always be a supply of new workers willing to work for next-to-nothing. And so it makes it very competitive and makes it difficult to make a fair wage. And, frankly, a lot of the buyers don't really care much about quality, and a lot of the projects are of a dubious nature, so they will just go to the lowest bidder. Or hedge their bets by hiring more than one person to do the same job, since it can be so cheap.
It's not true for every freelance site. But it is for most. Examine the policies of any site you consider with a fine-toothed comb.
Bottom line is there is little to attract experienced developers. I signed-up for a couple of these sites a couple years ago (including eLance). I was reprimanded for referencing outside experience. I never did find a single project that made any sense to take on. Assignments I was following went for insanely low prices. Like, I would estimate $10,000, given my estimate of the amount of work and my usual rate, and it would go for $200. It was obvious that a lot of the bidders were not individuals but companies running sweat-shops. (Come on, no individual complete hundreds of projects per year. Anyway, most DO allow companies anyway.) Of course, they could make the investment in selling for next-to-nothing until they have enough experience in the reputation system.
