Hi Mild Scientist,
There is a lot of good and bad said about freelancing websites, but hopefully my experience will be helpful to you. I run a prototyping company, focusing on developing electronics, software and data analytics prototypes. While not the same as what you do, it is a technical niche, and as a result there is less work around, but also much less competition.
Prior to starting my company, I used to freelance, and I had best results using PeoplePerHour. The approach that I took was to use google to try and find an engineer, and see where it lead me, and PPH was the top of the list.
More and more companies seem to be using PPH and similar websites to find skills they need, so I am finding more and more that there are people who need specialist work done, and have a sensible budget for it.
The best advice I can give about freelancing sites is to always put solid effort into writing your proposals. I have done some outsourcing through PPH, and it is amazing how many boiler plate proposals you receive, where the applicant clearly hasn't read the job description. I tend to just delete these almost immediately.
A good proposal should introduce yourself, give a little background about your skills/experience and more specifically, how you can apply that to the clients needs. Don't be afraid to talk in a little bit of detail about the techniques you think you might use to help that client, and also ask questions if the project description was a little vague (which it usually is). This shows that you have read the ad, understand the problem and are keen to understand it better, which is exactly the kind of thing that most clients would be looking for, and most freelancers don't demonstrate (in my experience)
When I put through a proposal, I do the above, and my goal is to arrange a discussion with the client to better understand what they want done and why. From this I put together a more detailed proposal document, breaking down the work I think needs to be done, and justifying the price. I have had a lot of feedback from clients I got from freelancing websites that this has really stood out to them.
If you notice that the job you apply for has had a lot of other applicants, pay to make yours a premium application. Focus on the projects that you know you can do really well, and make quality applications, rather than going for hundreds of boiler plate proposals. It is an investment of time, but I think it pays off.
It is true that many clients are tempted to go with cheaper options, but I have had a couple of times where a client initially did so, and then came back to me a few months later saying that it hadn't worked out for them, and they needed something better. Many people have been burned by bad freelancers, and as a result avoid the cheapest option.
With specific regards to PPH, they have an hourly system that is great, you can list fixed proceed services that are effectively 'buy it now'. I'd recommend creating a few of these, and they should be competitively priced. I have received a huge number of inquiries from people finding my hourly, which resulted in them wanting much more than the scope of the hourly, thus committing to a larger project.
I hope that this information is helpful, and I wish you luck building your freelancing business.
Regards,
-Steve