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Differences in Hiring an Agency vs. Freelancers

Matija Bermanec & Lorena Ujević




What makes one choose an agency or a freelancer? What are the similarities and differences in their approach? This blog will discuss the pros and cons of each option.


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Do you think Shakespeare was having a hard time deciding to be or not to be? Imagine the struggle if he had to decide whether he should hire an agency or a freelancer for his upcoming project. His decision wouldn’t be so hard if he knew what we are about to share.

One of the crucial components of building a successful business is deciding whether you should work with your own resources or if you should include external professionals and outsource some parts of your business.

External professionals are both freelancers and agencies. However, it is important to define the distinction between the two. A software agency is a team of professionals highly skilled in design, development, and other software services, while freelancers can be defined as self-employed individuals not necessarily committed to a particular employer.

Dilemma situations

There are certain situations where clients find themselves in a dilemma of what to do after having an original idea for their project. Once clients figure out that they cannot pursue their project internally due to market conditions and/or lack of their own experience in building software solutions, they start considering outsourcing. At this point, feelings of confusion can surface.

Is there an easy way out of this dilemma? By now, you are probably wondering what should be done next, whether a freelancer or an agency should be chosen to work on the project?

In order to ensure investors that they have put their money in the right bucket, innovative and unique start-ups are looking for the design and/or development of their MVPs. This helps them receive user feedback as quickly as possible for them to iterate and improve on the product.

Furthermore, small companies in need of certain design or development work are also to be found in such a dilemma, mostly because they have smaller projects that don’t require a long completion timeframe. This also makes them consider taking freelancers over agencies or vice versa.

Making a choice

In order to figure out the logic behind the decision-making process, it is crucial to understand the lifecycle of the entire project, even before the actual design and development work starts. There are key differences between a freelancer's approach and the one that a design and development agency (like Cinnamon) has.

The difference starts as early as in the sales process. An agency will provide you with the main point of contact throughout the sales process, while specific discussions about your project will be led by relevant experts within the agency: the technical feasibility of your project will be discussed with the CTO or appropriate team lead, while the design will be arranged with the Head of Design or relevant product designer and management of the project will be discussed with Project managers. This will provide you with reassurance that your project is viewed holistically, from the idea phase to the deployment.

There are several different approaches to projects:

  • Hourly rate projects - defined on the basis of time invested in the project meaning that the client is billed on how much service is being provided.

  • Monthly retainers - projects established on the fee paid in advance by clients in order to ensure that the services will be available to them for the covered period.

  • Fixed price projects - long-term projects that are usually divided into payments (milestones) and defined on two bases: budget and timeline.

Moreover, the focus of this blog will be fixed-price projects. We will illustrate a situation of how the process is created and who the key players are.

A project estimate is a primary step necessary for setting up a project and defining the scope that is needed for the team to understand the goals of the project and clients’ expectations. After the estimate is done and the client is satisfied with what’s provided, the proposal is accepted and the project is officially won. This is the moment when the sales process is over and the project is handed over to the Project manager.

Depending on the scope of the project, the Project manager assembles a dedicated team of professionals that are best suited for the project based on their experience and knowledge, e.g. Product designer, Software developer, QA Engineer. The next step is an introductory call where both sides are introduced to one another. This is also a time when the whole team has a chance to get a grasp of where the project idea is coming from as well as to gather more information and specifications about the project. Here is where the first main difference between the freelancer and the agency can be noticed.

As mentioned, agencies have the entire team together with the Project manager at the client's disposal while the freelancers are on their own. If the hired freelancers are not able to do the whole project setup and planning, as well as all the tasks defined in the scope, the client has to hire a Project manager and the rest of the team additionally. Based on the acquired information, the whole team works together on project planning.

One of the essential objectives of project planning is to define milestones that represent significant deliverables. Milestones are measures of progress and are defined for each project differently. They represent the safety net for the client as they are proof of the team's efforts and devoted work. Furthermore, they are financially beneficial for an agency as they guarantee cash inflow and thus the agency’s liquidity. Freelancers, on the other hand, might have difficulties defining milestones, and project setup in general which could represent one of the differences.

Now is when the project is officially kicked off. Another crucial difference that is visible at this point is team structure. To illustrate this, each project team within Cinnamon has a project manager, team lead, lead designer/developer, support designer/developer, QA engineer and other professionals if needed. This can be defined as an agency’s advantage, meaning there is always someone to step in if the circumstances require that. Hence, it is easier to replace the existing individual and onboard a new one that would be a better match for the project.

Additionally, if choosing to work with an agency, the client has an opportunity to avoid fixed costs, namely office costs, sick leave, office equipment costs, etc. On the other hand, freelancers are on their own - meaning they have no support if they get stuck during the process. Besides that, they do not have anyone to monitor their tasks and efficacy as well as to take care of the organization of the work itself. Dealing with all those additional tasks can lead to being overwhelmed which might cause them to change the project if given the opportunity to work on something better or more interesting while leaving the client empty-handed and “projectless”. If the chosen freelancer is, for some reason, unable to pursue the project, the client is strained to find another one. That can be time-consuming and could have negative consequences, such as projects being postponed and/or canceled due to the lack of adequate replacement.

This process is still not over, stay tuned to find out the differences in the communication, design, development, and quality assurance processes as well as what happens once the project is finished.

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