Freelancer vs Agency vs In-house

Freelancer? Agency? In-house team/roles? What should you use? There are pros and cons of all situations.

I have worked in-house and loved it, and I currently freelance and love it. I have worked with many agencies and found them great partners to work with. I have hired freelancers and full-time in-house positions.

Reasons to use a Freelancer

Pros of using a freelancer

  • Low commitment: You can test out a new position you are thinking of hiring for, without having to fully commit

  • Managing workload/cash flow: You can hire a freelancer for the duration of a project or to cover a time when you have lots of work

  • Low barrier to exit: You don’t have to pay a freelancer redundancy

  • No sick days: You don’t have to pay a freelancer sick leave

  • No public holiday pay: You don’t have to pay a freelancer public holidays

  • No super stress: A freelancer is in charge of paying their own superannuation

  • Low barrier to exit #2: If a freelancer is not a good fit, you can simply end the relationship and move on

  • Low barrier to entry: You can have access to an expert in a particular area, without having to take them on full time hours. You can share them with other businesses.

  • Low barrier to entry #2: They supply their own tools/equipment/office space. Eg. You don’t have to supply them with a laptop

  • No payroll: A freelancer  has an ABN and will take responsibility to invoice you

  • Less paperwork: If you are a small business, it can be an easy way to get an extra pair of hands without an extra lot of paperwork

  • No additional stresses: They don’t expect a Christmas party

  • No training budgets: They are responsible for their own training and staying up-to-date in their area of expertise.

Cons of using a freelancer

  • They are more expensive: Freelancers charge more than what you would pay an in-house employee because:

    • They are paying their own tax

    • They are paying their own super

    • They are not guaranteed any future long term work. They are in charge of their own marketing and work pipeline. 

    • They do not get paid sick leave

    • They do not get paid annual leave

    • They do not get paid public holidays

    • They supply their own equipment, software and office space

    • They do not get long service leave

    • They do not get employer-paid industry training, conferences etc.

  • It depends on the industry and the level of expertise but on average a freelancer may charge 1.5-2x the rate you would expect to pay a salaried employee

  • Not always available last-minute: A freelancer may have other clients and may not always be available to take on unplanned, last-minute work at the drop of a hat or they may charge a rush fee for last-minute work

  • Not as much control over time and place of work: Freelancers usually set their own hours and place of work, rather than the employee setting them

  • No “water-cooler” chat, harder to integrate: Freelancers may not be able to integrate easily with other employees to get the information they need because they are not seeing them face-to-face. They cannot easily have “water cooler chat”

  • Trust: The company has to be able to trust the freelancer to access their systems and follow their IT policies etc. Of course signing any relevant contracts or NDAs is always advisable!

Reasons to use an agency

Pros of using an agency

  • Experts, a team of them, and flexible: Using an agency can be a way to get a dedicated team of experts, without the cost of having to hire a whole dedicated team of experts and with more flexibility

  • Whereas with a freelancer, you hire a digital marketing allrounder, or an expert in one particular area (Eg. landing page design, paid ads), with an agency, they will often have a whole team on your account. Eg. a graphic designer, a copywriter, a Facebook ads expert, a Google ads expert, an SEO expert ect.

  • Fresh blood: An agency can often help you think ‘outside the box’ and bring in fresh ideas. They may have training in things like innovation and creativity. There are processes and methods around these!


Cons of using an agency

  • Moolah: Agencies are often the priciest option. That is because they have the overhead of hiring all these experts and usually have the costing of the office space to keep them.

  • Value-for-money: Not all agencies - but some agencies work on the model of charging out as much cheap junior hours as possible. 

  • Burnout: Some agencies have a reputation for burning their employees out.

Reasons to hire in-house

Pros of hiring in-house

  • Values match: You can hire a person, who matches your values and ethics, to bond and be part of your team

  • Trained your way: You can train this person in a way that you see fit

  • Inside-out knowledge: This person will get to know your business and industry inside-out and back-to-front as they will be working in it every day (assuming they are full-time)

  • Your time, your way: You can set the hours the in-house person will work, whether that be full or part-time

  • You can set the location that the in-house person will work. Eg. in-office, hybrid, remote

  • More affordable for the long-haul: An in-house person is cheaper than an agency or a freelancer as they are getting guaranteed sick leave, paid leave, public holidays, superannuation and they don’t have any overhead home-office or commercial office costs

  • Relationship satisfaction: You may have the satisfaction of having a fantastic relationship with a long-term employee who grows with the business and sticks around for many years

Cons of hiring in-house

  • Commitment: You are committing to hiring and paying someone for a minimum length of time

  • Long-term responsibility: You have to give this person notice and/or a redundancy payout if you no longer have work for them

  • The difficulty of cutting loose: If the employee turns out not to be a good fit after their probation period, you have to manage them out in the appropriate way. With written warnings, resolution meetings, etc.

  • Know the law: You are responsible for following any industry awards and benefits that go along with that eg. overtime rates, RDOs etc

  • Less flexibility with workload: You can’t negotiate to scale up or down their hours easily according to the work you have or the money you have coming in

  • Unproductive hours: You have to pay sick leave, annual leave and public holidays

  • Training budgets: You are responsible for providing this person with any training or conferences that may help them keep up-to-date in their industry

  • Unproductive hours #2: Not all billable hours may always be accounted for. Productivity may not always be 100%. There is value in chatting around the water cooler! However agencies and freelancers often have to be able to justify their “billable hours” or may quote you on a per project basis

  • Social tax and time to organise: You are most likely expected to organise/pay-for social events like Christmas parties

  • Tax, tax, tax: You have to pay payroll tax if you meet the threshold

Freelancer? Agency? Or in-house? Other peoples’ opinions

Some opinions from other people.

Fractional Senior Marketer

A company that has the budget for a junior staff member but the needs of a senior staff member may benefit from  a fractional senior resource who is likely able to move a lot faster and therefore get more done than a junior. Depending on how ambitious the company is, this might be a better solution to build the business and then look at hiring internally.”

Jasmin Chia, The Marketing Essentialist . Jasmin has worked both in-house, agency-side and as a Fractional Senior Marketer.

Comments?

What are your experiences and thoughts? Comment down below. I would love to hear them.

Chloe BaileyComment