Ian Ippolito, Founder and CEO of vWorker.com has provided some good answers and insight into how he is able to undercut most people in the market, particularly oDesk, in offering outsourced services on a pay for time basis for as little as 6.5% commission.

When I asked Ian how vWorker could afford to offer its new pay for time service at such a keen price, undercutting rivals oDesk by up to 35%, he responded: “We can lower prices so substantially because our costs are substantially lower than oDesk’s.  And that gives us more of an ability to pass those savings on to our customers.

We grew purely based on our profits, while Odesk grew based on $29 million in infusions of venture capital.  As a result, they are beholden to generate much higher levels of returns to keep their investors happy. We started with a $10,000 personal loan, which we  paid back years ago; so we don’t have this additional price burden.  We also run much leaner than they do. They have a staff of 40+ people to pay, while we have only 14 mouths to feed.  They have to pay for a board of directors while we do not.  They are in Silicon Valley where everything (talent, office space, etc.) is much more expensive.  We are in Tampa, Florida where everything is much cheaper.  Etc. etc.

This is our “secret” and why we can afford to charge 10-35% less.  It’s also why we’ve been profitable since our 1st month of existence.”

I think this will have a profound impact on vWorker's bottom line and will help them attract a surge of talented providers who, like businesses are always looking to reduce their overheads. Will it be enough to spur a price war in the industry and enable buyers and workers to pay less commission across the board when using online marketplaces? Only time will tell. But I think some other players in the market may respond with fee reductions in 2011.