The Lifestream of Jon Moss

Outsourcing: How to Read the Price Tag

October 27 2008, 12:33am

Small business owners wear many hats: manager, buyer, accountant, you name it. It is impossible for one person to take care of everything, and the most commonly outsourced tasks revolve around marketing, branding and design. When first deciding to work with a professional, you are going to be looking at the price tag attached to the promised services. It may be shocking to some small business owners how much certain freelance or consulting services can cost, but there are ways to save. Reading the Price Tag Next time a consultant charges you $1000 a day, don’t fall over backwards. First consider the following: if you would hire a professional on a one year contract, the salary, taxes and benefits packages would amount to about $200.000 on average. Take into account the consultant only has a certain number of billable days a week, you are paying a premium for the flexibility of not hiring him on a full time basis. You end up saving on benefits, and you probably don’t have enough work to keep someone busy all year so hiring simply doesn’t make sense for your business. Pricing is, or should be, based on what your best alternative is. In this case, your alternative is to hire someone for a longer term. Considering there are maybe about 236 billable days a year, you need to look at how much an employee costs you a day if you would hire him or her. Don’t just think salary; consider all other costs and expenses associated with an additional hire. You’ll see you still end up saving by hiring a professional for a short term. How to Save on Freelancers There are many freelancers who have ‘virtual networks.’ If you need copy writing services, design services, and printing, you could get all your services from the ‘same’ provider. Basically, a virtual network entails a connection between different freelancers who work together on multi-disciplinary projects. This way, they resemble a fully staffed advertising agency, but at a more attractive total price. Like with anything, you could shop around for the best possible deal. What is important is to look beyond the price tag and see what a freelancer is made of: not everyone will be right for your project, and although price does play a role it isn’t everything.

What has your experience been with outsourcing? Have you looked for a freelancer only based on cost, or based on expertise?

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