The Challenges of Freelancing

 I’ve sold $15,000,000+ in design projects in the last 4 years. Here’s some harsh truths.

1. Big companies with big budgets pay for security
2. Small companies with small budgets pay for flexibility
3. Freelancers will make money helping agencies. Agency partners will make more
4. AI will won’t help small studios win bigger clients, they’ll still pay a premium for security
5. $5k/mo is bad deal for both sides
6. Fixed-cost / fixed-timeline is about to be the most lucrative way to structure projects for mid-size agencies +
7. <$50k projects want upfront rates for flexible time, >$50k projects want predictable cost + time
8. Async-only leads to low impact work. Real results require collaboration
9. Trello boards aren’t process. Process matters.
10. Design subscriptions are fading fast. Too many customers got bad results. Design twitter ruined what should be a good model
11. Agencies/freelancers with huge distribution can charge an audience premium
12. Agencies need to start giving equity to employees
13. Agency > Venture Studios will do a lot more equity/cash deals to ship products
14. Procurement teams are still the final boss for agencies <15 ppl
15. Sites that win Awwwards pay 10x less than “boring” enterprise. Enterprise is where the money is.
16. RFPs are represent bad clients. Avoid.

What did I miss?

Design agencies never hit big revenue numbers until they add engineering. Revenue then becomes a 70/30 split with engineering dominating. At that point are you even a design shop? But you all aren’t ready to have the conversation yet.

1. Big Companies Pay for Stability:
   Large corporations with substantial budgets prioritize stability and security above all else. They are willing to invest heavily in proven solutions and providers to minimize risks and ensure reliability.

2. Small Companies Value Adaptability:
   Smaller businesses, constrained by limited financial resources, are more focused on flexibility. They need service providers who can adapt to their needs within their budget constraints.

3. Freelancers as Agency Support:
   Independent freelancers can earn a good income by partnering with agencies to fulfill specific project needs. However, the lion’s share of the profits often goes to the agency owners or partners who manage these collaborations.

4. AI’s Limited Impact for Small Studios:
   Artificial intelligence is unlikely to be a game-changer for small studios aiming to secure large clients. Enterprises will continue to prioritize providers who offer proven security and reliability, paying a premium for these guarantees.

5. $5,000 Monthly Retainers Don’t Work:
   Retainers set at $5,000 per month are often misaligned with the needs of both clients and agencies. They tend to result in unmet expectations and insufficient value on both sides.

6. Fixed-Cost Projects Are Key for Agencies:
   Fixed-cost, fixed-timeline pricing models are emerging as the most profitable approach for mid-sized agencies. These structures align expectations and simplify project management.

7. Budget-Specific Preferences:
   Projects with budgets under $50,000 generally seek upfront pricing with flexible timelines to accommodate changing needs. On the other hand, larger projects exceeding $50,000 require clear predictability in both cost and timeline.

8. Collaboration Beats Asynchronous Workflows:
   Solely asynchronous workflows, while convenient, tend to produce less impactful results. Meaningful outcomes require real-time collaboration and active teamwork.

9. The Importance of Defined Processes:
   Simply relying on tools like Trello does not equate to having a robust process. A well-structured and clear process is essential for maintaining quality and efficiency.

10. The Decline of Design Subscriptions:
    Design subscription services are rapidly losing favor due to poor client experiences. Many customers received subpar results, and negative narratives on social media platforms have further tarnished the model.

11. Premium Pricing Through Influence:
    Agencies and freelancers with significant reach, visibility, or influence can command higher rates. Their audience and reputation allow them to charge a premium for their services.

12. Equity as Employee Incentive:
    To attract and retain top talent, agencies should start offering employees equity in the company. This not only motivates staff but also aligns their success with the agency’s long-term growth.

13. Agency-Driven Venture Studios:
    Agencies evolving into venture studios are likely to pursue more equity-and-cash deals. This approach helps them partner in launching innovative products while sharing in the long-term rewards.

14. Procurement Teams Are a Major Barrier:
    For smaller agencies with fewer than 15 employees, navigating procurement teams remains a significant challenge. These teams often act as gatekeepers, making it difficult to secure large contracts.

15. Enterprise Clients Pay Far More:
    Projects that win creative awards, such as those recognized by Awwwards, often generate significantly less revenue than enterprise-focused work. While less glamorous, enterprise clients represent the most reliable and lucrative income source.

16. Avoid RFPs:
    Requests for Proposals (RFPs) are typically a warning sign of difficult clients. Engaging with RFP-based opportunities often leads to frustration and wasted resources, making them best avoided.