How Using Subcontractors for Projects Can Earn You More Money
Posted May 13, 2011 in How-To, Managing Clients
What if I told you there is a way you could be making more money without working extra hard?
You’d think I’m crazy right?
Many of us have a specialty we provide for our clients and that’s the full extent of our business.
Others might sell paid products like e-books or teach classes, but for the most part a freelancer’s income is directly impacted by the amount of work they output.
It doesn’t have to be this way.
Making more money doesn’t have to mean taking on extra work, or figuring out how you’re going to manage an entire month on four hours of sleep.
What About Those Other People You Know?
I don’t need to stress why online friends are important, but I do need to stress that your online friends are vital to you making more money with minimal effort.
It’s not that they’re going to give you more exposure, in fact, it’s not anything they’re going to do for you.
It’s what you’re going to do for them.
Now I’m assuming that as a professional freelancer you’re active in different communities, not just to prevent loneliness, but to cultivate connections with the people within the community.
Well, your online friends need work too, and you just might be the perfect person to give it to them.
The Trouble with Straight Up Referrals
One thing freelancers do if someone they know is looking for help outside of their specialty is refer them to another freelancer.
It’s a perfectly natural instinct but it is actually a terrible practice. Not only is it preventing you from making more money, it’s also putting your reputation at risk every time you refer someone out.
Think of it like setting two people up on a blind date. You know them in the context of your own relationship, but it’s actually impossible to judge how they’re going to get along with each other.
As a hypothetical, let’s say someone in your community is an excellent designer, and you know someone looking for design work.
Now what if your “designer friend” has the email that only works after you’ve sent five messages? Or they work on the “Half up front”/disappear for month/”you better pay me and be happy with whatever I give you” system? Just because they produce great work doesn’t mean they’re great to work with.
Likewise, your “client friend” might turn out to be a monstrous beast hellspawn whose blood flows with the misery of freelancers.
If both “freelancer” and “client” fit these profiles, the world will collapse from the inside out, universes will be destroyed, small children will be sacrificed and you’ll have to live with knowing–It was all your fault.
Think of Yourself as a Professional Middleman
Now let’s take this same scenario, but give you a little more involvement.
You know someone who is looking for design work. Instead of just referring them over to your freelancer friend, dig a little deeper to find out what exactly they are looking for. What are their goals? What are the metrics that will determine their success? You know, pre-scope the project.
When you know more of the specifics, get in contact with your freelancer friend, give them the scope and find out how much they charge.
Now this is where most people would give up the controls. Don’t even think about it.
This is the part where you start making more money.
After you’ve found out how much your freelancer friend charges, tack on a little extra “finder’s fee.” If the would-be “client friend” accepts the price, your new job is to act as the go-between, which usually only means bouncing emails back and forth between freelancer and client, and handling the money.
Now if you’re considering setting fire to the comments calling this unethical, consider this: You’ve spent the time to cultivate your relationships within your networks, why shouldn’t you benefit for helping someone else solve their problem?
From the viewpoint of your freelancer friend, you’re taking care of the sales conversation and client management side of things, so they can focus on actually getting work done.
How’s It Done?
Listen.
That’s pretty much it. When you’re participating in community conversations, actually listen to what people have to say.
If someone you know in one community is complaining about how they don’t have many people commenting on their blog, and you know a copywriter in another community who talks about how they can always get a minimum of 20 comments on every post (and here’s why) that might be a good match.
If a friend is talking about how their sales pages don’t convert well, and another friend specializes in landing page design, they might also be a good match.
Pay attention to the needs of others, and become familiar with the strengths of the people in your community.
The more people whose styles you’re familiar with, the more relationships you build, the greater ability you have to be making more money without actually doing the work.
Will you get the occasional headache? Of course.
But it’s not nearly as common as it is with client work. Also, where you’re not the one doing the actual work, the people you connect with are going to be far more likely to be patient with you.
In the end, you’ll end up making more money by copying and pasting a handful of emails and spending maybe an hour on the phone.
Pretty sweet gig, eh?
Your Turn
Have you used subcontractors?
How did that work out?
Image by andjohan
Related posts:
- Earn More Money by Growing Your Freelancing Business
- 5 Ways to Earn More Than the Average Freelancer
- The Value Of Trustworthy Subcontractors
- A Guide to Creating Your Own Projects
- How to Quote Projects for Work You’ve Never Done
About the author: Tommy Walker is an an Online Marketing Strategist. He had been doing various forms of internet marketing since 2005. You can find him at Tommy.ismy.name.
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22 Comments
Eric Barr
May 13th, 2011 at 9:14 amI completely agree with the concept, I use it quite often. I use subcontractors who have skills in different areas than I do. When I am approached about a project that requires one of these skills, I let the potential client know that one of my team members is an expert in that area and we will provide a quote.
If it is a contract where I plan to charge hourly, then I usually decide on some hourly rate, then I let my subcontractor team member know what rate I can pay them, which is some amount less. If it is a fixed bid, then I still make my own bid first, then ask my subcontractor if they can do the work for some fixed amount less than that. Either way, I like to get committal from the subcontractor before going back to the potential client with the quote. The subcontractors know I’m getting a markup, just not how much. And they appreciate the work and not having to deal with the client or accounting, so I think it all works great.
The only thing I’d disagree with here is the amount of time it takes. I find that I can spend a lot of time on the phone or in person with clients talking about new requirements or showing them progress. And there is phone/email time with subcontractors to talk about implementation strategies or unexpected issues that need to be relayed back to the client. So I can spend many hours being the middleman, but it still ends up well worth the amount I make in the markup.
Thanks!
Tommy Walker
May 13th, 2011 at 9:56 amThanks for that Eric!
Depending on the process you take, it can take more time.
I recently had a client from hell scenario that kept coming back with a million minor changes and ended up taking up way more time that it was worth for both myself and the developer I work with.
But generally for me it’s a matter of pressing forward on the email. Where I haven’t been actively scouting and making the lead generation portion of this process part of my business, but instead this comes as a more natural extention of the interaction I participate in the online communities I’m a part of, that could be the difference.
Thank you for sharing your experience though, I hadn’t even thought of how you go about the hourly bid. That’s brilliant!
Preston
May 13th, 2011 at 10:30 amI’ve heard some people say this is the ONLY WAY to make REAL money as a freelancer.
I’m not sure I’d go so far as to say that, but I have been an advocate of this strategy for a long time.
Humourously enough, when I wrote about this same topic on my blog, I used the word “Outsourcing” instead of “subcontractor” and a lot of people got really upset.
Great post. Thanks for sharing.
Rishi Patel
May 13th, 2011 at 10:38 amI use subcontractors all the time. Most of my time is spent finding clients and administrating my business. I very rarely do design or development work to completion myself. I do, however always have a clear idea of what I need before I take it to the subcontractor.
James Lamb
May 13th, 2011 at 10:46 amWhat disagree with is the “tack on a little extra finder’s fee.” – I think it has to be a lot more than “a little”.
First there is the money – does the subcontractor get paid even if you don’t or do they wait for the money to come to you, clear, and then you pay them?
Next, you are the client-facing one, so you still take responsibility for foul-ups – trying to pass the blame on won’t work with the client, it is still your reputation for quality delivery, so you need to include an element of quality control before sending stuff onto the client.
My use of subcontractors has been for projects too large for one person to take on, so they involve merging work from multiple people too.
What I don’t get is what you say to the client in a single subcontractor situation to explain why you are not putting them in direct touch. What does the client think they are getting out of the arrangement?
Yisrael Reiss
May 13th, 2011 at 10:58 amEric, this is brilliant. I never thought of doing this before, but it makes so much sense. Thanks for the post.
Joe Elias
May 13th, 2011 at 12:21 pmAs my business continues to grow quickly, I’ve found that subcontractors are a must. After a vetting process, I’ve ended up with a short list of highly capable professionals in my area to whom I can provide projects as they come up. Many of them are within my capability, but aren’t my cup of tea, so I use the team when I get booked up with several projects at once. We’ve tackled a few projects I would have otherwise had to pass on, so it has been very beneficial. I’m always upfront with the client and let them know that I act in an administrative role for these projects, so there is no confusion as to roles and responsibilities.
It has only helped my reputation locally – I’m becoming known as the nice designer guy with really fast turnarounds. I’m one or two compliments away from selling t-shirts (for which, coincidentally, I have a subcontractor for the design work).
Tommy Walker
May 13th, 2011 at 12:22 pm@James
This method for me is about passive income.
It must be noted that I do not actively seek out opportunities, they are a by-product of the interactions I have in different forums.
With that being said, the “clients” are all people that I’ve interacted with in one way or another and we are both familiar with each other’s style, and work. The headline was changed as part of the editing process, and I think is a little misleading. The person I work with, I don’t consider a subcontractor, but a colleague who’s work I am proud to showcase. I use him for all of my own projects, and because of that, people I interact with also want a piece of that as well.
I take “a little” because I have a more personal relationship with my developer and don’t want to take advantage.
If I don’t get paid, the contractor doesn’t charge, but that is only because we have a close working relationship for over two years. It must be noted though that if nobody get’s paid, the work also does not get released.
Because of the nature of the “lead generation” which is all passive, I am up front with the people who ask to work with me that I am playing “point man” on the project, but am not the actual service provider. This understanding from the outset let’s people know that I personally am not in charge of the quality output, but there also is a small amount of Quality Control because my developer has been in design for over 20 years and consistently produces high quality work. If it does become an issue, I get a little more involved to solve the problem, but that is rare.
I do not put them in direct touch, in the event of it being damaging to both the client and my contractor. Where my reputation could be on the line if the two do not get along. I am able to “speak both languages” if you will where I can speak to a developer in a way they understand, but also speak to a “client” to get what they need. Sometimes client work requires a translator, so instead of watching both people bang their head against a wall due to mis communication, I take on that role so the project is seen through to completion with minimal communication errors between what is wanted, and what is executed. Hope that makes sense :-)
Tommy Walker
May 13th, 2011 at 12:27 pm@joe
This is perfect!
And exactly what I’m talking about.
It’s not about outsourcing the work to another team just to make more money, so much as it is working with other highly skilled individuals that have a quality of work that is in line with your own.
I’m going to be checking out your stuff right after I hit the submit button :-)
Rachel Small
May 13th, 2011 at 6:06 pmThanks for the useful information, Tommy. I haven’t subcontracted work out yet but plan to.
Tommy Walker
May 13th, 2011 at 9:11 pm@Rachel
No problem. Best thing I could recommend is get really familiar with the skillsets with the other people in your virtual network. If someone produces the same level of work you would in your own field, you might be a good match.
Also a quick tip for quick prospecting, set up a twitter search for what they do and get friendly with the people who need help…
It’s much easier to make friends without getting “pitchy” when it’s not your own work.
Christian Entrepreneur
May 13th, 2011 at 11:16 pmAs an entrepreneur, I would highly recommend hiring others to leverage time to your advantage. You can’t do it all in one day, and even get to boost someone elses economy. Priceless!
James Lamb
May 14th, 2011 at 5:58 amThanks for the further explanation.
You said “I take “a little” because I have a more personal relationship with my developer and don’t want to take advantage.”. That wasn’t what I meant. My point there was that the time involved can be significant and if you only charge “a little” then it is very easy to make a loss. There is no point doing this if I am earning less per hour than if I am doing normal work (unless I am unable to fill my time with normal work).
Tommy Walker
May 14th, 2011 at 4:50 pm@james
Of course! with this you always want to make sure your mark up is going to be worth the time involved. Normally I don’t work on hourly, so perhaps that was something I should have taken into consideration.
It’s important to factor in your profit margin, and that’s really a discussion between you and the client…. here’s what my guy said on the topic…
“the person creating the work, although aware that the middleman is marking up, is often happy because a) they are still usually stipulating their standard work rates, b) they’re not wasting time back and forth with clients as its in the middlemans’ best interest to keep things as concise as possible for both ends – thus leaving them free to actually create the work and c) they have work coming to them without spending/wasting time and resources sourcing work. Middleman is happy with their mark-up whatever % it may be – that is between them and client – leaves them free to build bigger networks and connect more people.”
Paul
September 16th, 2011 at 9:54 amHi there, this is a wonderfull explanation of how to subcontract diferent people depending the need of the case.
I start doing this a few time ago, and really works. Always I do subcontract, but sometimes i am the “designer friend” subcontracted, but that’s ok too, right?
for me work in both ways.
Thanks for the great article!
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