[anovikov]

There is no such thing as being outbid on freelancing sites. All clients see these outsourcing companies' bids as simply a spam preventing from interviewing 'real' candidates. If they are not hiring you it's something else wrong, not the price. Try thinking about the way you write cover letter: this is the main thing a real customer pays attention to (contrary to what people think it is - feedback score, experience etc). Reason is that overwhelming majority of applications on projects are merely a spam, sometimes automatically posted by a script. Every application letter which clearly does NOT sound like a spam (e.g. contains some project specific details, something on your plan on how you would do it), stands out and gets an interview.

[anovikov]

My suggestion for freelance sites: charge people for bidding on projects. $20 per bid will be just right. Refund these for the applicant who ends up being hired. You can decrease your commissions then to discourage people from circumventing your service, remaining profitable, and keep competitive by vastly increasing the value of your service to customers because they will not have to get through tons of spam applications. Qualified freelancers will flock to you because they will not be put off by crowds of low-quality, low-priced competitors.

There is of course another problem, which is harder to fix: spam projects. People who state that they want one thing and upon interview want to lure you into something else, like working for free, for some imaginary future profit sharing (always a scam), working fixed price with a vaguely defined project goals etc...