I'd like to share my brief experience with Elance. My business is software development (web, mobile or desktop).
After going through this thread and also some of the related links (esp.
Hacking Elance), I signed up, filled my profile with details phrased to sound professional, I started bidding.
In all my proposals I have been very detailed about my analysis of the client's situation (based on the info they provided), my relevant experience, and the suggested plan of approaching the project.
I recorded a video proposal several times, too, as suggested in the Hacking Elance article. This hasn't had an effect yet; I suppose I'm not a great TV personality

However I need to test this more to be sure.
To my great surprise, I won my 8th bid with a client who initially responded with a very detailed follow-up to his project posting. After a brief back-and-forth, I sketched some mock-ups for him and let him know I'm ready to start working if he chooses me. Which he immediately did.
It was a web application of the ecommerce sort that I knew would cost me more (based on my ideal hourly rate) than the bid amount, but it was supposed to be a learning experience, too (I did not work with the technology I was supposed to know for ~ 2 years) and also a way to establish my reputation on Elance. When you are new there, you really want to get some 5-start feedback ASAP so that the buyers see you've proved yourself.
I delivered the project in ~ 3 weeks, out of which I may have spent 5 full working days on it (which, again, rendered any profit to be an investment rather). Luckily the client communicated extremely well and did not make any demands that would go too far from the original agreement. He also made a prompt payment and gave me my coveted 5-star rating.
Now, mission accomplished, I might have thought, but looking at the project postings there, I am not yet optimistic. I mean, most of the projects are not described very well and have unrealistic budgets, which means the clients themselves are not very clear about what they want and what they should be paying for it. And let me tell you, these are the clients from hell.
What I'm looking for in clients are people who run a genuine business and have a clear vision of what they're trying to accomplish; they may not understand the technology all that well but are easy to talk to and you can persuade them to follow your advice IF they are convinced you understand their business and truly want to help them. However, I may only find one or two such prospects any single day among the wasteland of "website scraping", Wordpress bug fixing etc.
In the end it seems Elance will only be a stepping stone for me until I can develop relationships with serious clients who'll give me serious business over the long term.
Any fellow techie who's had success there?