Freelancer vs Agency vs In-house
Here is a list of pros and cons I have written about hiring a freelancer vs an agency, vs in house. In my opinion, 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.
What are your experiences and thoughts? Comment down below. I would love to hear them.
Reasons to use a Freelancer
Pros of using a freelancer
You can test out a new position you are thinking of hiring for, without having to fully commit
You can simply hire a freelancer for the duration of a project or to cover a time when you have lots of work
You don’t have to pay a freelancer redundancy
You don’t have to pay a freelancer sick leave
You don’t have to pay a freelancer public holidays
A freelancer is in charge of paying their own superannuation
If a freelancer is not a good fit, you can simply end the relationship and move on
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.
They supply their own tools/equipment/office space. Eg. You don’t have to supply them with a laptop
A freelancer has an ABN and will take responsibility to invoice you
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
They don’t expect a Christmas party
They are responsible for their own training for staying up-to-date in their industry.
Cons of using a freelancer
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
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
Freelancers usually set their own hours and place of work, rather than the employee setting them
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”
The company has to be able to trust the freelancer to access their systems and follow their IT policies etc.
Reasons to use an agency
Pros of using an agency
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
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
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.
Not all agencies - but some agencies work on the model of charging out as much cheap junior hours as possible.
Some agencies have a reputation for burning their employees out.
Reasons to hire in-house
Pros of hiring in-house
You can hire a person, who matches your values and ethics, to bond and be part of your team
You can train this person in a way that you see fit
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)
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
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
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
You are committing to hiring and paying someone for a minimum length of time
You are responsible for paying this person every month/fortnight along with calculating and tracking their paid leave, sick leave, super and or any staff and software that go along with doing payroll
You have to give this person notice and/or a redundancy payout if you no longer have work for them
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.
You are responsible for following any industry awards and benefits that go along with that eg. overtime rates, RDOs etc
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
You have to pay sick leave, annual leave and public holidays
You are responsible for providing this person with any training or conferences that may help them keep up-to-date in their industry
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.
You are most likely expected to organise/pay-for social events like Christmas parties
You have to pay payroll tax if you meet the threshold
You have to be across industry rates and laws