I am considering creating an Agency and I have read the basics, however, I have failed to find out information how an Agency Owner can make money from finding jobs to team of freelancers.
Often times I have to decline projects due to lack of time or I just simply need assistance in some areas. In a non uncommon scenario (at least in real life) one sub-contract intermediate contractors then you polish the areas where needed to. So, if I charge $50 an hour I would find a freelancer who can do the job, under my supervision for let say $40, earning myself an income of $10 which accounts for finding the job, supervising it and being accountable person.
How does it work on the Upwork Agency and how do I income out of the Agency Owner position?
Solved! Go to Solution.
Charley F wrote:
So, if I charge $50 an hour I would find a freelancer who can do the job, under my supervision for let say $40, earning myself an income of $10 which accounts for finding the job, supervising it and being accountable person.
You would have to use one of your agency members (not just "a freelancer") at $ 30 to make $ 10 an hour (outside of Upwork) and this is generally why clients stay clear of agencies.
Why should they pay an extra $ 10 an hour for... what, exactly? An extra layer, that's ultimately it...
Hi Petra, thank you for your comments. I guess it would depend on the industry. My question is more in regards to the setup Upwork has to make that happen. I wouldn't like to work outside of Upwork, I am very happy with the service they provide and I want them to be succesful, pay my fair share.
I have come accross both scenarios where clients don't want agencies as well as those who do not want independant freelancers. Actually, those who do want to work only with agencies, they have spent quite amount of money of work, some up to 6 digits!
And client don't have to pay an additional $10. The difference comes from the agreement between the Agency owner and the freelancer. For what exactly one could think. What I gather from that is, that there are clients that want reliability and accountability just as they do in real life situations.
There are several reasons why clients would like to work with agencies:
- An agency have a line up of people who can take over the project in case of an illness, death or emergency.
- An agency will have an array of services that can be offered under one roof. In my case, clients need copywriters, animators, creative directors, voice over talents, etc. Imagine having to hire and deal with 5 different people for just one project when you can do it just with one.
- An agency would most likely be "in synk" throught the entire project because all the comunication is happening with all the people involved in just one place. Can you imagine as a client, having to talk to 5 different people and have to pass each of them new information each time? It is unnecesary burden for the client.
- An agency can be very effective when it comes to tight deadline as it can have several freelancers work in various sections of the project all at once, reducing delivery time or in the case of an emergency project with tight deadline.
- An agency can guarantee delivery time (for reason mentioned above) which is very important to many clients. Missing a deadline or not delivering a final product at all, can cost the client thousands of dollars and time lost.
These are a few that came from top of my head.
I don't think a client comes to an agency worrying about if they would pay $10 more an hour. They would just go by: 1- If they like your work, 2- They can afford your hourly rate 3- Your reputation.
That said, and going back to the original topic, for your response (and lack of other comments) and additional information out there, it seems to be that Upwork Agencies are basically just to group freelancers together.
If my assesement is correct, there is little value from our point of view (not the client) to create an agency.
You seem to be under the mistaken impression that a client can "hire an agency" rather than the individual agency freelancers. This is wrong.
And if you (the agency) wants to take $ 10 per hour of the $ 50 the client pays, the client (obviously) gets an $ 30 an hour freelancer for their $ 50 an hour. Upwork fee and your $ 10. Do the maths.
Also, you have to pay your agency freelancers (after they created accounts and provided those accounts are approved and your clients hire those individual freelancers through the agency (!) ) outside of Upwork. That is how agencies on Upwork work.
And I can tell you that few clients positively prefer hiring an agency.
Many do it only once, more or less by accident.
Having been on Upwork for 8 years and having spoken to hundreds of clients, I can assure you that few actively WANT to hire agency freelancers. I have spoken to many clients who won't even open proposals from agency freelancers. They are kicked out unseen.
When I hire, I do the same.
Thank you for your response. You are correct; I was under the impression that an Agency on Upwork would operate as an Agency in real life, which is more or less my background. I am still in my early research but it is clear to me now, that it is not what I expected nor something interesting to pursue.
I am sorry I had to disagree with you.
The client neither wins nor loses as long as he has chosen to work with you for a price that he has deemed affordable to him. Otherwise, the client would move on and search for options according to his budget. Prices respond to demand and offer.
Under your consideration, a person that at one time charged $40 per hour, and now is charging $50 for the same kind of work, is this person overcharging $10 to the client? Check few random freelancers and see their rate history. You will see a fluctuation usually increasing in value. That is free market right there! and that is great!
In the same manner, a freelancer who's quality of work is worth $50 but he has decided, by his own faculties and for whatever reason that he is willing to charge $30, isn't this person free to exercise his options? If it was not convenient for him (the freelancer) just as the client would do, he would move on to find options that will suite their needs.
In conclusion, costs are market driven and it is not dishonest to pursue increasing your income as long as is legal and agreed upon the parties.
Thank you for the time invested, it really did help me and answered my question!
Charley, I'm not sure anyone here answered your question. Does the system permit you to list a talent at a higher hourly and pay them at a lower hourly? I believe it does.
Will clients pay it? Yes, some clients will because they value that it is part of a a system, a process and a team. There is redundancy, quality controls and so forth. That is what an agency brings. Single freelancers do not brainstorm, they do not have proofreaders, they don't have code reviews.
Those who understand this as owners can sell the concept of an agency, provided they also can show a portfolio of superior work. And they can command higher hourly rates.
Recently, I created an agency at Upwork and I have been able to make good progress in the last few months. To answer straight to your question :
As you are figuring out to make money as an Agency Owner, I assume that you already have your hands full with work and now looking at to scale.
1. The trick here is to find out the right opportunities with your existing clients who already trust you. So, start gaining projects from your clients.
2. Once you have more projects than you can handle, you can search for freelancers who can join your team to help you.
3. In this process you would definitely want to keep your margin.
4.If you use the right filters on Upwork, you will be able to find good freelancers.
5. Voala... now you are ready to start the execution of the project.
6. Be aware as an agency owner, the freelancer should join your agency.
7. The contract from your client should come to you.
8. Then you need to work to figure out how you would want to pay your team members.
9. You will need to pay your team outside upwork, so you will have to figure it out.
Feel free to come back with more questions.
Wish you all the best.