How to Position Your WordPress Business: The Freelancer Versus Agency Dilemma

Posted on August 27, 2015 by in Tips & Tricks | 22 comments

How to Position Your WordPress Business: The Freelancer Versus Agency Dilemma

There seems to be a time in almost every WordPress freelancers career where they start to wonder whether working under an agency model might provide some kind of advantage.

And then we have the agency crowd who might sometimes wonder whether life would be simpler working as a freelancer.

It’s not an easy question and I don’t think there is any perfect answer. Each model has it own benefits, advantages and yes, disadvantages. Some are more clear-cut than others while some depend more upon your personality type and your goals.

In this post, we’re going to look at both the freelance and agency models, taking a look at both sides of the coin. In the end, I think there is probably a clear winner but it will depend more upon you than anything else. Both models can be great for their own reasons.

Freelancers Need to Specialize

A lot of people feel that freelancers need to specialize. The truth is, it depends upon your business model more than anything else. If you’re a WordPress freelancer who tends to work with the end client, you’re less likely to be specialized and more likely to have a broad skill-set.

A small business customer rarely knows the difference between a WordPress developer and designer. They often expect that you’ll be able to tackle any task they throw at you, whether it’s within your scope of practice or not. In these types of situations, specialization might be helpful but rarely is it a selling point.

On the other hand, if your freelance model means you target working with agencies, you’ll benefit greatly from being a specialist. The more defined your area of expertise is, the easier it will be to find work. You’ll need to be good at what you do and be competitive with things like your day-rate. Agencies that you hope to work with have a budget that they will need you to work within. This can put a limit on your earning potential as well.

A Natural Progression

For all the arguments for or against freelancers vs agencies, we still have to ask, do the minor differences really matter? Many agencies started out as WordPress freelancers – a sole individual working from home. You can do the same.

Over time as your workload increases and clients begin coming to you with larger projects, you’ll be faced with making a tough decision. Do you want continue working as a freelancer or adopt the agency label?

Freelancers Have a Lower Overhead

Team Management

Team Management – Image by microvector / shutterstock.com

There are a lot of additional expenses that can come with running an agency especially if your team is housed under one roof. Things like rent, business class internet, electricity, and office supplies for an entire team tend to add up pretty quickly. Before you know it you’re faced with thousands of dollars in fixed monthly overheads. That’s money that needs to be made before you’ll be able to earn a penny of profit.

As a Freelancer, there is a good chance you work from home. Sure, you’re going to have some associated business expenses but many of those would be present with or without your freelance business. Now, some of them have the benefit of being a write-off.

It’s pretty clear that freelancers have a slight edge when comparing the two models above except for one thing. There is no written rule that says you need to run your agency from a fixed location – just take a look at a company like 10up – they’re running a successful agency using a distributed team model.

WordPress Freelancers Need to Charge Less Than an Agency

This is a great argument that on the surface, seems to make complete sense. If, as a Freelancer you’re faced with lower monthly costs when it comes to running your business, does it makes sense that your fees should be lower than someone operating as a traditional agency?

Well, not really. If you have two business owners who are offering a comparable product or service, why should one be expected to charge less simply because they have a more efficient business model? Looking at it this way, it would appear that both models are perfectly entitled to charge whatever they desire.

Do freelancers need to, or are they expected to charge less than an agency? No. Could they? Yes. And doing so could potentially be a competitive advantage as long as you’re careful about it. The risk here is that if your fees appear to be too discounted, you might leave potential clients with the feeling that you’re offering a service that is of lower value.

Freelancers Can’t Scale Their Business

Scale Your Freelance Business

Scale Your Freelance Business – Image by VIGE.CO / shutterstock.com

Meeting the demands of larger clients is another issue. There are two parts to this problem. The first is an issue of scale. How can a freelancer possibly scale their business to meet the demands of larger clients who require a more diverse skill-set?

In the past, this could definitely have been an issue that’s cause for concern. However, the ease of finding and collaborating with other freelancers in the WordPress space is such that this no longer presents an issue. Just like managed WordPress hosting companies are able to scale hosting requirements to accommodate a spike in traffic, so too can an individual freelancer.

Agencies do however offer a slight advantage in their speed of collaboration. Agencies can react much faster than a freelancer who needs to find and hire other contractors based upon the project requirements. Quite often, an agency will have multiple skill sets under one roof or at least all in the same Slack team. This ability to collaborate rapidly is a definite advantage.

Are You Tied to Your Business?

Being a Freelancer means you can choose to scale your business as required. As a WordPress developer, you might have a project that requires you to bring a photographer, designer and copywriter on board in the short term.

This works well and helps you to meet the needs of a wide variety of clients. But what happens when you step away from your business for two-weeks? Chances are your prospecting, projects, billing and customer service all come to a grinding halt. This is one of the few potential fatal flaws of being a freelancer – you business relies heavily on you.

How are things different for an agency? While it’s certainly possible for an agency to rely on contractors, they are also more likely to have full or part-time employees. This allows for the possibility of handing off certain business tasks within the agency. With the right SOPs in place, it’s even feasible that you, as the lead WordPress designer or developer, could step away from your business for a period of time – maybe indefinitely.

I think you’d have to give a slight edge here to the agency model. However, this is highly dependent upon your personal goals. If you’re happy operating as a freelancer for the long term, then you have nothing to worry about. If you would like to be able to step away from your business at some point in time, then an agency model might be more appealing.

Working In Your Business vs On Your Business

This is closely related to our previous point. As a freelancer, you are your business. You are essentially committing to working in your business for the long term. You’ll have built yourself a nice job. Maybe it’s a little more flexible than if you chose to work for an employer, but it’s a job none the less.

As the owner of a small agency, even a distributed one, you be more apt to spend time working on your business – prospecting for new clients, hiring good employees and keeping customer service top-notch. You can always step in and out of the designer/developer role as required.

Connections & Capital

If you’re launching a new WordPress business, there are two important things to consider. As a freelancer, well-established connections and relationships can make your journey much easier. If you have the required expertise on speed-dial, you’ll have a lot more confidence when it comes to taking on new projects.

If you’ve decided to go with the agency model, you’re going to be in a position of having to attract talent. This is rarely an easy process. All of a sudden, instead of competing for just clients, you’ll also be competing to attract talent. The more of a commitment you require from employees or contractors, the more of a financial commitment they’ll require from you.

Think carefully about the need for a physical location if you’re heading down the path of starting an agency. Nothing kills a new business faster than not being able to keep up with a massive fixed-overhead.

Wrap-Up

The debate between the agency and freelance model probably attracts more attention than it deserves. There can be some distinct differences between the two models, especially when it comes to things such as specialization. But for the most part, the line is becoming increasingly blurred.

It’s relatively easy for someone working as a freelancer to scale their team as necessary while maintaining the freedoms that typically come with being a freelancer. The biggest trade-off is the inability step away from your business. In many cases, you are the business, but even this line is becoming increasingly difficult to distinguish.

If you are currently a freelancer in the WordPress space, what do you see as separating yourself from someone who is running a small agency?

If you’re currently running an agency, what do you see as your core advantages over freelancers?

Article thumbnail image by Sentavio / shutterstock.com

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22 Comments

  1. Great article.
    I am a freelancer and finding another person is what stoping me to expand. I am not able to hit right combination of skill and there payout. Which cause loss in past.
    Your article is great and moral boosting for me.

  2. I am currently trying to start freelance work in building websites from code and WordPress (WordPress developer? Web Dev? I don’t even know what to call myself! Sigh)– These articles really help me absorb the feel for the industry I’m stepping into, so thanks.

    BTW, if anyone knows of some good sites/communities/books to help a newbie out, I’d be very appreciative! I know how to make sites, now I just need to understand my environment:)

  3. I had a small agency that focused on SMBs in a variety of vertical markets. The 2008 market crash ended that for me. By the end of 2010 working alone from home trying to pick up the pieces. I realized that I don’t want employees anymore and I am going avoid hiring in the traditional manner. I am now hiring talent who also work from home. Acting as Art Director and production manager allows the work together faster. I am slowly building a stable of talent that can do things quicker and more efficient Hoping that this will be he best of both worlds.

  4. A freelancer is best suited for small individual business/website. A freelancer must have broad skills to address various problems of this small sites.
    Every website/business has different problems and differ from each other and can be best addressed by a freelancer than a specialist.

  5. Great article Joe!
    I think this has just confirmed exactly who I am as I was beginning to wonder whether I had 1 foot in as an agency and the other as a freelancer.

    I’m now convinced the freelance route is the way to go (or stick to) as its proved to be great so far. I’m not up for the stress of running a business as an agency.

  6. I’ve been freelancing for a dozen or so years, with no plans ever to transition to an agency. I have found myself outsourcing a bit more recently, and hired a virtual assistant last month, but those are small steps to keep organized and finish tasks more quickly, not scale.

    I work with a wide variety of clients and don’t really specialize at all, even in terms of platforms, with roughly half my sites on Joomla and the other half on WordPress. I do everything from design and development to hosting and copy writing, SEO and digital marketing to social media and printed collateral. I’m not the best at any one of those, but my clients can trust me to do the job well and they like the personalized service I offer.

    I’m completely booked out through the end of the year with a backlog of potential clients, so I figure I’ll just keep charging more until I’m comfortable. It’s not a bad place to be, and with vibrant online and local freelancing communities, I never feel like I’m going at it alone.

    • This is very encouraging Lisa, as I am trying to determine my next steps. Thanks!

  7. I am darned if I know what to call myself. Some sites I build completely, some I use a graphic artist to a greater or lesser extent depending on the specific needs of the site and I need a varying amount of coding and or CSS input.

    I think that I am essentially a project manager managing the task, liaising with customers etc and also doing a greater or lesser amount of work depending on the circumstances

  8. I have an agency in New Delhi, India. The overheads are draining me as the business is erratic here. I am an expert in wordpress and have created over 50 sites myself. Your article has given me the confidence that I can work as a freelancer. I want to work for USA /UK clients. How to get business from there?
    Thanks, Aashish

  9. Hi, and thnaks for this article.

    I’m french freelancer. But usually i am called “agency” to reassure customers…

    When you’re called freelancer, sometimes, the customers are afraid.

    So sometimes i’m a freelancer and sometimes an agency ! And for some contracts i join another freelancer or agency.

    Good luck everyone !

    http://www.mwv-solutionsweb.fr

    • Greg, I have a quick question for you, what plugins do you use to cache static content, and how do you configure it? It seems to be working very well. I would like to learn a thing or two from you.

      Cheers,

      Jeremy

  10. I’m really appreciating the Elegant Themes blog’s recent focus on the lifestyle and operations of running a freelance web building business – including the first Divi Nation podcast. I’ve been doing this since 1997, feeling my way along, growing the business as my family grew. I’ve had similar debates with myself about becoming more of an agency, but I guess I like doing the work better than I like sales, and would always be a very hands-on project manager and copywriter whatever happened. WordPress had made it easier for me to offer more functionality. In that way, my business is in partnership with people more on the development side, particularly when I choose a premium theme or plugin. In an uncertain world, helping to build this new thing called the internet is a good place to be.

  11. This is definitely something I have thought a lot about and it’s cool to know other people think about these things as well. I definitely like the freelance lifestyle. I have hired out tasks like customizing plugins and such and have found in many aspects of my life that it’s so much better to hire people at what they are good at and stick to do what I’m good at and what I like.

  12. Great article! I love all the stuff you guys are doing, it’s not just about selling Elegant Themes, it is about contributing to the community.

    This article is exactly where I am at a crossroads with my business, busy enough to have a team but not busy enough to justify lots of overhead. I really am having a hard time managing myself and my team but without them I very well could fall on my face. Gotta figure out how I can get away from 50-60 hour weeks and still provide the customer service that my clients deserve. Any advice would be appreciated.

    Thanks!

  13. Great article,

    I’m a freelancer for some years now, working mostly with WordPress, however I’m thinking to start with the agency model, started to train one of my housemates in WordPress, so I can continue to follow my Digital Marketing passion.

  14. Great article! I find that, in trying to move from one to the other, I’m currently stuck in the situation of working within both.

    I still freelance for a number of agencies who prefer to work with a freelancer rather than with an agency. I do this under my freelance name, “Battica Design” – http://www.battica.co.za

    But I’ve slowly started building my business into a creative studio, allowing me to offer more services, and to approach these in a different way. Hence Black Crab Creative – http://www.blackcrab.co.za

    At this stage, I like being able to be open to both, but the main aim is to build the business, and eventually work ON the business, not in the business, as you have said.. 🙂

  15. Very interesting article – Each category has its own pro & cons. Each category has its own set of clients.
    Big corporate or small growing business would like to go with agency. But a small company who has just started up would prefer freelancer because of faster adaptability required or charges.

  16. A very good article and a very good comment by Amit Jain – Kudos!

  17. Very good article, exactly the kind of insights I am looking for. I wonder if there is a midway point between a freelancer and an agency? What if you manage a project, you work on some aspects yourself, but you also hire other freelancers to work on other aspects of the project? Is that still a distributed agency?

  18. Well, the problem with freelancing is you can’t get a 10k job if you’re not a demi-god in this industry because people know you can’t be an expert at, say, SEO and Graphic Design at the same time. You may be above average in both.

    • hi Ed,

      You can take a 10k job easily by working with some other freelance who are expert in their fields like webdesign or SEO. I work often with a webdesigner to create custom designs for clients.

      I also work most of the time with a SEO freelancer when the clients need search engine marketing complete solution (SEM + SEO + social network + …).

      It needs a bit of organization in order to have only one contact for the client but it works for us and we bring back business each other.

      Every six months, I don’t know if I will try to develop a small company but what I dread is to rush ahead (my english is not good for this kind of expression). If you have an employee, you have to pay him every month.

      So if you loose some business, you have more pressure. Beeing a freelance let me manage this pressure as I can earn a lot some months and far less the other with no worries.

  19. Great article!

    I really enjoy being a freelance designer/developer and would probably enjoy working with an agency as well. However, the biggest issue with web design as a business is the ability to get new clients.

    I’m sure most web designers/developers are great at what they do best, but an agency beats the the freelancer with their ability to find clients at a much higher rate.

    So, the bottom line is the skills needed to sell your services in order to get clients and, skills as a designer/developer are really secondary. Perhaps, I’m in the wrong profession, hmm.

    Cheers!

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