Marketing your business

Should You Subcontract Through Agencies And Consultancies?

By Brennan Dunn

I’ve had a few people over the last few months ask me about my thoughts around subcontracting for agencies or consultancies (what I’ll call “firms” throughout the rest of this post.) A lot of us freelancers, especially those who haven’t systemized getting new clients, often see working through firms as a lifeline. These firms have the clients and the projects, but they occasionally need outside help. And that’s where we come in. So you white-label yourself as an agent of the firm, get paid, and totally avoid needing to secure your own clients. And hey, sometimes you don’t even need to TALK to the actual client! But there is a downside.

It’s mostly impossible to avoid being a “resource” for the team you subcontract for (keep reading to find out what the exception to the rule is.) You won’t really be able to price yourself on the value you produce, and your client — that is, the firm — is going to want to make as much profit as possible off you.

So there’s a limit to how much you’re able to make, and the firm’s clients will never truly be your clients.

Do I recommend trying to sustain your business by subcontracting through others? Not really. But here’s something you might want to consider…

The other day, I took part in a really interesting conversation on Twitter:

Twitter conversation about recurring revenue

The overwhelming majority of firms (that is, consultancies and agencies) make their money off one-off transactions. They work an hour, they bill for an hour. Or they work on a project, and bill for the project.

What if you could approach firms and offer a win-win… What if you could help them make more money off their existing client base?Recall a few months ago when I wrote about how to build up recurring revenue as a freelancer. The big takeaway was that clients generally will be willing to pay you monthly if you can successfully 1) provide insurance that their website or application doesn’t one day decide to heel over and die or 2) provide continuous optimization, driven by data, to help make a website or application even more valuable for the client. By increasing peace of mind and/or creating additional value a client will usually be willing to buy a retainer package. So what does this have to do with firms and you? Remember how I mentioned that most firms only make money off their time? Well, when all your income comes from winning new projects, working on them, and delivering, you run the risk of running into a dry spell. And just like every other business on the planet, these firms like to be able to budget against guaranteed income. (Talk to me sometime about what it’s like to start each month knowing you have to bring in $100k in new projects in order to make payroll.)

Let’s say you’re an awesome systems administrator. You might approach a bigger firm and say, “Your clients spend five to six figures on you to build something for them. What if we could guarantee backups are happening as expected? Or should the underlying framework have some security breach, we’ll be able to promptly patch their application? We’ll review your clients and their needs and present a compelling offer that will help them sleep safely each month knowing things are humming along nicely.”

Or if you’re sharp when it comes to copywriting and conversions: “Do you think your clients would like to make more money each month off the website you built them? (Of course you do.) How about I collect, analyze, and assess their website data each month and create A/B tests that can help them generate more leads / make more sales / whatever else is valuable to them?”

When you’re running a services company, staffing is a nightmare. (I’ve been there. I ran a team of 11.) The last thing they want to do is to carve out time each month for maintenance work. (Again: been there, done that.)

So you come in and offer them to make more money each month off the work you’ll be doing — their only job is to just supply the clients. Had I been approached by some savvy freelance consultant who wanted to help me make more money each month when I was running my consultancy… let’s just say I would have had a very hard time saying no.

It’s a win-win for you, your client (the firm), and their clients. Your client charges their clients a fixed amount each month, and their total responsibility is to get paid and pay you a majority of it. The firm ends up with money they wouldn’t have had, their client gets all the perks and benefits that you provide them, and you walk away with a sizable deposit to your bank account — knowing full well that in 30 days that same deposit will come again.

A few final reasons why you should seriously consider trying this:

  • You won’t just be a short-term resource for a bigger company. You’ll still maintain ownership: You define the product, you set the price points, you outline the sales pitch.
  • Many of these package products — when done right — should easily net you an effective hourly rate in the upper three figures (or more.)
  • Who doesn’t want predictable revenue? Imagine teaming up with a few consultancies and selling a package that makes you $2,000 a month to just 5 of their clients.