Toptal is an international online platform for finding top freelancers. It matches clients with talented professionals who want to earn extra income through flexible contracts.
As for how Toptal makes money, what they do is charge clients for their services.
Toptal is an internet platform for finding freelance workers who provide services at rates higher than average. It charges a percentage markup above the hourly rates of the freelancer’s peers.
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About Toptal
Founded in 2010, Toptal is a privately held software development firm that has been profitable from day one. It raised $1.5 million from Andreessen Horowitz and others.
Toptal is a worldwide community of top software engineers, designers, and business people who collaborate to connect talented freelancers with high-quality client opportunities.
Toptal matches the top 3 percent of software engineers around the world with clients who need them for short-term projects.
By the end of 2021, it’s estimated that there are more than 4,200 people actively using Toptal for their professional development.
Toptal has worked with over 700 companies in 16 different countries and includes some of the biggest brands in technology such as Samsung, PayPal, eBay, and Zendo.
How Does Toptal Make Money?
With Toptal, companies get access to the skills and experience of some of the best developers in the world. And freelance developers gain access to quality projects and feedback from an experienced team.
Toptal takes care of the marketing and sales expenses so that freelancers get paid for their services without having to pay for them themselves. They claim to be the largest distributed global team of professionals available online. They don’t have an actual headquarters or offices.
Toptal charges clients directly for the hours worked by their freelancers. They then pay them at a much lower rate than they would if they were paying through an agency or hiring platform.
You can use Toptal to find freelance developers who are skilled at developing iOS apps. They can be matched with projects in about 24 hours.
Company revenues for 2020 are estimated at over $200 million.
Toptal’s Estimated Revenue Growth
Here is a table comparing the estimated annual revenue for each year since its inception:
The company reported that it was growing at an annualized rate of 40%.
Toptal Business Model Challenges
Toptal uses a unique business strategy where they accept only clients who meet strict criteria for high-end talent. This approach resonated with both clients and job seekers because Toptal grows by double-digit percentages every year.
Two-sided marketplaces use manual matchmaking procedures, which are less scalable than fully automated matchmaking procedures.
As the online staffing market grows, the competition gets even tougher. Large enterprises, that care more about tech and people, present a big problem for smaller, less curated platforms like Toptal’s.
Toptal’s Competitors
Toptal is effectively tackling the growing talent shortage but it faces stiff competition from its competitors.
Many online marketplaces exist that offer freelance services to people who claim they’re in the top 3% in their fields. Toptal targets software engineers and other professional freelancers.
Competitors of Toptal include Andela (a competitor), MBO Partners (a competitor), O.C. Tanner (a competitor), Terminal (a competitor), and Transforify (another competitor). Other freelance marketplaces include Upwork, Freelancer, PeoplePerHour, Guru, Fiverr, and 99
- Toptal sued Andela in June 2021 for allegedly copying Toptal’s freelance platform with the help of Toptal employees.
- Business Talent Group: Online services for finding contractors and freelancers.
- CloudDevs helps businesses and developers get together for collaboration.
- Content Creates: Specializes in freelance writers.
- CrowdSpring specializes in hiring freelance artists for web design projects.
- Dribbble Hire: Specialises in hiring freelancers for design
- Envato Studio specializes in providing designers, programmers, and other digital talents for hire.
- Fiverr: General freelance marketplace.
- Freelance: A system for freelancers.
- Freelancer.com: General freelance marketplace.
- Gun.io: specializes in hiring software engineers.
- Guru.com: General freelance marketplace.
- Lemon.io: specializes in web development.
- MBO Partners provides contract work for freelancers.
- Headhunters: Traditional agencies that use headhunting tactics
- PeoplePerHour: General freelance marketplace.
- Popular Pays: Specializes in influencers.
- Skyword360 specializes in content creation for marketers.
- Supersourcing: A company that specializes in hiring contractors for projects.
- A specialized recruiting agency for freelancers.
- Transformify: A job placement service for lecturers, experts, and consultants.
- Upwork: General freelance marketplace.
- Series: specializes in hiring freelance writers for their client’s websites.
How Much Does a Software Engineer Make Working for Toptal?
Toptal began by providing the service of hiring freelance programmers and engineers. According to Glassdoor, a programmer earns an hourly rate of between $62 and $66, and an engineer earns an annual salary of between $110,000 and $116,000.
According to the US Bureau of Labor Statistics, the median annual salary for an American software engineer was $110,140 in 2019. This aligns with the average income made by a software engineer working at Toptal.
An experienced senior-level application development engineer in India makes $18,000 per year.
Toptal makes an hourly rate adjustment based on the country where the job takes place. However, people working for the Toptal platform in countries like India probably earn a lot compared to people working for the platform in countries like the US.
How Much Do Clients Pay to Hire a Toptal Software Developer?
Clients typically pay twice the rate that Toptal charges for its services.
Flexible states that an hourly rate for a TopTal software developer ranges between $60 and $150+. Part-timers get paid anywhere from $1,000 to 2,400 per week. Full-timers earn anywhere from $2,000 to 4,800 per week.
Note that Flexible has not been vetted by Toptal. These rates may be too high for Toptal’s typical pricing, but they might be fair estimates.
Pros and Cons of Hiring a Toptal Software Developer
There are some good points to be made about Toptal’s success.
Pros
- Toptal has an extremely high bar for new hires. They require their employees to be among the most talented software engineers out there. Furthermore, they expect their employees to continue receiving good feedback from clients after each project.
- You’re going to be matched with someone who has exactly the right skills for the job. We recommend you give them a call within 24 hrs!
- Established company and brand: Toptal is well established and has many large enterprises as its clients.
Cons
- One of the biggest obstacles to hiring a developer through Toptal is the high price tag. The markup on the monthly fee is often more than 100%.
- Minimum commitment: You must pay an initial $500 deposit to get started working through our system. We require at least 20 hours of effort per week from you for each job.
What Does It Take to Become a Toptal Hire?
To ensure that its clients get the best people available, total screens candidates by asking them questions via video chat. Its screening processes include skill tests, an English test, and a personality test.
It could take up to 5 weeks before you’re approved to start working at the firm.
Out of tens of thousands of monthly applicants, only the top three percent get accepted.
This onboarding flow consists of the following steps:
- Video Call Interview
- Timed Skills Test
- Screen Sharing Evaluation
- Simulated Project
1. Video Call Interview
The video conference screening is used to assess candidates’ abilities in the English language. It is intended to ensure that they can comprehend what is said and that they are able to communicate effectively.
During an interview, the interviewer assesses your communication skills, which include your ability to communicate effectively with the interviewer and be able to work well with others.
2. Timed Skills Test
If you fail steps 1 and 2 of this onboarding process, you’re out. About 90% of people who take this job application quiz fail at least one of these steps.
3. Screen Sharing Evaluation
While doing so, the applicant shares his or her computer monitor with an evaluator who watches him or her perform difficult tasks. The evaluator observes the applicant’s speed, accuracy, and creativity when solving problems.
4. Simulated Project
You’re given an assignment where you need to complete something within a set period of time, for instance, 30 working hours.
To be accepted into the program, you must submit a detailed application form, which takes several days to complete. However, tens of thousands of people send applications every month. They want to get hired by the best companies in the world.
What Types of Professionals Does Toptal Have in Its System?
Enterprises with various project initiatives, and start-up firms, can tap a talent pool consisting of software engineers skilled in using these coding languages and platforms:
The designers who work for the company use the different systems listed below:
Acquisitions and Growth in Offerings
SkillBridge was founded in 2014 by two entrepreneurs who wanted to create a freelance marketplace where freelancers could get jobs from clients looking for specific skills.
On September 1st, 2017, Toptal launched an automotive vertical which provides the services of automotive designers and software developers who specialize in the automotive sector.
Toptal has just announced its latest addition to its portfolio of developer services a new vertical focused on blockchain developers.
Potential Investors
The company does not plan to be publicly traded and does not want to talk to any potential investors who disagree with its business strategy.
Du Val says he has a successful business. It is scalable without needing external funding. He intends to grow his business by scaling up to hundreds of thousands of people worldwide and doing so the way he wants.
Here is a quick overview of the conditions required by potential investors to invest in your business.
- The company has no physical location and will always be located online.
- There is no downside to investing.
- Investors won’t be offered a board position. There isn’t one.
- There won’t be any drag, ratchets, MFNs, tags, tranches, etc., but there could be
- None of the participants has any preferred or preferred rights.
- No liquidation preferences.
You don’t need any external funding, so if you’re interested in investing in the business, forget about it.
Over the last few years, Toptal’s been holding a unique position in the world of online recruiting. It hasn’t taken any outside funding and instead has stayed focused on a small segment within the industry.
As it grows, Toptal has been able to grow quickly but now faces a decision – can it continue growing at the current rate or will it reach a limit?
Conclusion: How Does Toptal Make Money?
Now let’s take a look at how Toptal makes money!
As an online platform where freelance workers can be hired, Toptal stands out among its competitors because they’re able to operate at lower costs than most companies. But their business model isn’t unique.
Toptal is an online marketplace where individuals and businesses connect through freelance work. Freelance workers (called “Toptal’s”) find clients and get paid for their services. Clients hire freelancers based on the skill sets they require and pay them directly via PayPal, Venmo, Stripe, or any other method.
They have big plans for the future and are sticking with them. They’ve built up an excellent freelance network, despite having frequent changes in direction.
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