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
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
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.
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?
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