This is not a freelancer ‘sob story’ and neither is this blog about the challenges of procurement leads pushing contract agencies for lower margins.
It’s a story about the human interaction between a project manager and a freelancer.
Hidden agency margins hurt the freelancer and the manager because neither is able to ascertain what level of work is required or should be expected based on the set fee.
A project manager hires a developer for 12 months at a cost of £700 per day who is in fact paid £560 by the agency.
For the PM this is a stretch. It is slightly above the ideal budget and now it is a necessity the developer works fast to bring in the work early and come under project budget.
For the developer this is a job taken because of timing and ‘if a better paid job comes along’ it will be hard for the freelancer to reject it.
4 weeks into the project the PM has a one-to-one with the developer to discuss the pace of the work. In theory neither are contractually permitted to disclose the rate. (This only helps the agency and is a policy that is often disregarded).
The PM mentions the stresses they are under on budget control. Casually the freelancer mentions they are also concerned as the agent said budget was a pressure so a low daily rate was applied.
Both sides feel uneasy. Neither side is at fault.
A project manager asks an agency to find a developer for a 12 month contract. They do. High fives all round.
The agency supplies an excellent selection of profiles and following some interviews one developer is selected who joins the project a few weeks later.
Unfortunately the management is changed, and the business direction is under question so the project is halted immediately. Two weeks payment is made to the agency and most of this is passed to the freelancer.
All that work for 2 weeks of margin. Is this good trade?
A final example:
A project manager and a freelancer catch up having worked together a few years ago.
As luck would have it, one is in need of a freelancer and the other has just finished a contract.
Procurement policy dictates an agency should be used to manage the papertrail, help on timesheets and invoicing and keep the relationship IR35 friendly.
A call is put in to a known agency … what margin can you charge if I give you a candidate?
(Frankly I’d prefer you offered us the work at our normal margins but) “how about 10%?”
Both sides have done the other a favour yet neither have received one!
As shown by the above it is good news that 6prog designed a platform with managers, freelancers and recruiters’ best interests in mind. An ultra low services charge for paperless paperwork that streamlines the process, a fixed fee for recruitment services (or networking introductions) AND no hidden margins.
1/ Decide what you are selling. List out your key skills and accomplishments. Clients will typically want to know about pieces of work that you have started, managed and completed.
2/ Invest in some good kit. If you are a designer you will need the correct hardware. Whatever type of freelancing you do, you will need to communicate; well and often. Make sure your phone, email and social media accounts work. Set your 6prog alerts to ‘on’.
3/ Decide where you are keen to work – internationally or in your home town? What are the laws that dictate how much tax you need to pay and what are the costs of living in that place?
4/ Who is in your network who will help you? Other freelancers, recruiters who know you, and networking sites can keep your business private and also give you recognition and new clients that you are in control of.
5/ Blogs: keep learning. If you have made it to point five you are already doing this!
6/ Select some business tools to help you stay organised. Blog coming soon on some of our favourites.