When you were in college getting your Bachelor’s Degree in Freelancing…
that’s not a thing.
Maybe you have a business degree, maybe you’ve worked for another creative agency, or maybe you’re lucky enough to come from a long line of freelancers in your family. But most folks who start freelancing have to learn how to run a business the hard way—by running the business!
In my case, I came from a totally different industry—the journalism industry—and had never even stepped foot in a creative agency, much less worked for one.
So I went ahead and tried all the things and learned everything the hard way. After 10 years of running my business, I finally figured out a business model that works for me. But like all the hard lessons, I wish someone had told me to find an existing business model to follow or just showed me this list so I could have intentionally design my business in a way that would be profitable and make me happy.
A business model is a design for the successful operation of a business, identifying revenue sources, target customers, products & services, and financials.
How Business Models Help
In short, a business model is a plan for how a business is going to make money. So I’ve identified 16 business models and pricing structures for freelancers. You can refer to these models when starting or scaling your freelance business or when you are seriously unhappy about your work. Are you not making enough money? Are you spending time doing things you hate? Are your clients sucking your will to live?
Now keep in mind, your business likely won’t fit into just one business model. Mixing and matching will reveal even more options. Certain models that don’t scale well on their own become more scalable and profitable when paired with another model.
For example, you may be an Expert where you get clients for your high-end consulting through public speaking, which is not very scalable. But when you add to it the Product Model, you could sell your expertise in the form of a book or online course and have infinite scalability.
The possibilities are practically endless, but doing all the models at once won’t work. The more focus you have, the easier it will be to diagnose your problems, find your ideal clients and make money.
Your first step should be to understand the advantages and disadvantages of each model so you can choose which will work best for your business. Then you can create a more detailed business plan to figure out exactly what services you will sell, what expenses you have, who’s do how much you will charge, how you will get clients and more.
1. The Solo Model
This is a great model for self-starters who want to test the waters of being self-employed but who don’t want to invest a big ol’ pile of cash right away. This is the model most of you are familiar with. Having a one-person shop means you do all the things and you wear all the hats. You’re the salesperson, the accountant, the project manager, the janitor and the one doing all the billable work. You will have some costs for software, your computer and other tools, but for the most part, your overhead is low and your profit margins are high. This is one of the lowest risk models. After all, if it doesn’t work out, you can always go get another job or sell your plasma.
Pros: High profit margins. Easy to start. You have total control over your schedule, your services and the quality of the work.
Cons: You will be limited with how much you can make because you are selling your time, and there is only so much of that. You have to do things you don’t like and aren’t good at. It can get lonely working solo!
How to Get Clients: Personal referrals, repeat customers, gig websites, social media groups and forums, networking.
2. The Gig Model
This model is for freelancers who are good at finding new customers or who have a price advantage over their competitors. The Gig Model is project-based or hourly work that comes in from any number of clients for any number of services. You work like much like a musician. Find a gig. Do the gig. Look for the next gig. Repeat. The lower you can price your work, the easier it will be to get gigs. Quick turnaround and high volume usually go hand in hand here. This model works best if you offer low-frills services with little customization and have some kind of pricing advantage. A price advantage could be that you have a repeatable process, a cheap supplier, computer automation or it could be that you still live with your parents so you don’t have as many bills as most other people! If you sell too many different types of things with the Gig Model, it’s easy to underestimate how long a project will take. For example, if you’re a graphic designer creating a billboard one day and 3D movie graphics the next, you won’t be able to develop efficient work flows, bidding practices or customer acquisition strategies that will make your business profitable. If you offer too much customization, you won’t be able to price yourself competitively and may have a harder time getting gigs.
Pros: Allows for quick turnaround and low commitment.
Cons: Competition is high on gig websites, driving pricing down. This model can be feast or famine with an unpredictable work flow.
How to Get Clients: Personal connections, repeat clients, gig websites, networking, social media groups and forums.
3. The Outsource Model
This model is for someone who loves doing the work of freelancing but who doesn’t love all the trappings that come with running a business. When you find yourself with plenty of customers, and not enough time for all that other stuff, you’re likely ready to outsource some of your least favorite tasks. There are plenty of things you could outsource: accounting / bookkeeping, sales, appointment scheduling, social media management, website maintenance, to name a few. Virtual assistants are a great way to unload some of those tasks as are specialized vendors. With the Outsource Model, you can really increase your project output and billable hours without having to become a boss or sacrifice the quality of your work.
Pros: Allows you to focus on what you’re good at and what you love doing. Allows you to make more money by spending more time on billable work.
Cons: Adds to your overhead costs. You will need to spend time creating systems and managing those new vendors.
How to Get Clients: Search engine optimization, repeat customers, peer-to-peer referrals and customer referrals.
4. The Exporter Model
This is a good model for someone who likes working with people and managing projects. If you are a natural salesperson, there is no limit to the number of projects you can take on and the amount of money you can make with The Export. There is certainly no shortage of folks willing to do the work you are selling for much less than you are charging your clients. Hint: they don’t live in the U.S. With this model, you hire freelancers (or a company) from another country to do the work for pennies on the dollar. This allows you to undercut your competitors’ pricing and sell a lot of projects (this model is often paired with The Gig Model). Depending on your views on globalization, you may feel super gross about this model or great about providing jobs for people in a third world country. Just look on some of those gig websites like oDesk or Upwork to see how competitive it is out there. With this model, you’ll find yourself as the go-between and professional cat herder. You’ll become the face of the business, but the billable work will be done by others. This can be a very lucrative model but also one fraught with problems as you stake the fate of your company and your success on people you’ve never met.
Pros: High profit margins. Relatively easy to start.
Cons: May be stressful or inefficient to work through language barriers and time zone differences. It can be difficult to find and vet reliable subcontractors. Accounting and taxes could get tricky.
How to Get Clients: Gig websites, prospecting, email marketing, search engine optimization, PPC advertising and direct mail.
5. The Ring Leader Model
This is a good model for a well-connected freelancer who wants to scale up to The Agency Model but who isn’t quite ready for employees. This is similar to The Exporter Model, but the big difference is where you are finding your subcontractors. In the Ring Leader Model, you partner with local freelancers or people you know to take on some of your work. You may do some of the billable work yourself or act as the creative director. This model is a lot like a general contractor in construction who might do the framing of a house but call in another company to do the plumbing and another company to do the electrical work. You get bids from your subcontractors, mark them up and then bill the client directly for that work. Because your subs are working on a project basis and they have their own businesses, you don’t have to provide work for them all the time.
Pros: Allows you to slowly grow your company without the paperwork and headaches of employees. Allows you to expand services in areas where you are not an expert.
Cons: You can’t count on your subs to always be available when you need them. You have less control of the timing, quality and pricing or projects.
How to Get Clients: Networking, repeat customers, referral groups, search engine optimization, content marketing.
6. The White Label Model
This is a good model for people who are great at what they do but struggle with getting clients. This is one of the most underused models out there because most freelancers don’t think to partner with their competitors to grow their businesses. “White labeling” is a term used to describe a business relationship in which one company (the producer) creates a product that another company (the marketers) rebrand to make it appear as if they had made it. This is the opposite of The Ring Leader Model. In this case, you are the subcontractor for another freelancer or agency. They resell your work (i.e. the website you built, the video you edited) as their own at a marked up price. Although you are not technically an employee of that company, the other company may include you on their website as a “team member” and you may have an email address at their domain. Or in some cases, you may never talk to a client and there may be no client-facing evidence of your existence. If you continue to provide high quality work, the work will just keep coming to you. It’s a nice balance between the freedom and control of being self-employed and the stability and predictability of working for someone else.
Pros: You don’t have to continually go out and find new clients. One or two good clients could keep you totally busy. You will be able to spend more time doing the work you love—which also happens to be the billable stuff. You have less responsibility and fewer risks.
Cons: You have less control. You won’t make as much per hour as when you sell your own work. You often don’t get credit for your work (and sometimes can’t link to it on your portfolio).
How to Get Clients: Repeat customers, industry conferences, networking, responding to job postings on peer’s websites, prospecting, personal connections.
7. The Loss Leader Model
This model is great for freelancers who are starting out and just need some clients and experience and for businesses that are confident they will get repeat business once someone has worked with them. The Loss Leader concept has been used in other industries for decades, especially the restaurant industry. A fast food joint sells a cheeseburger for $1 (way less than it costs to produce the burger) because they know they can get you in the door for such a cheap price. They lose money on the cheeseburger so they can get you in the door to try their food and get you hooked on more profitable items. With a service-based business, this model can work well to get new customers. For example, if you’re a web designer, you could sell a website design for much less than your competitors are charging in order to then get the client to purchase upsells or ongoing web hosting or maintenance. You may lose money on the website project—or make way less than your preferred hourly rate—but then you start building a large clientele paying for monthly services or additional projects.
Pros: Easy to get clients in the door and build a large customer base quickly.
Cons: Creating a brand known for low prices can attract the worst kind of clients. Once you are known for being cheap, it’s harder to raise those prices.
How to Get Clients: Gig websites, prospecting, email marketing, search engine optimization, PPC advertising and direct mail.
8. The Robin Hood Model
This model is a good one for freelancers who want to make the world a better place while also sufficiently supporting themselves financially. In The Robin Hood Model, you work with both large companies and small businesses and nonprofits. You determine your pricing based on how large the client is or how big their budget is, much like a sliding scale pricing model. You have your minimum hourly rate or project fee that you offer to teeny tiny businesses and broke nonprofits. And then you have a percentage you add to your rate if the client is a large company with a fat marketing budget. Your profit margins will be higher for big fish clients, and that can help supplement some of the lower paid work for your passion projects. You might even offer a set number of pro bono projects through a contest or application process and consider becoming certified as a B Corporation.
Pros: You get to do social good, which also happens to be a great selling point. Allows you to work on projects you are passionate without sacrificing your need for a sustainable income. Pricing is in line with customer expectations / budget, which makes selling easier.
Cons: Depending how transparent you are, this could get awkward if clients find out you are charging them different rates. Easy to over-give or over-commit to volunteer projects.
How to Get Clients: Networking, social media, event marketing, personal referrals, repeat customers.
9. The Value Model
This model is great for freelancers who have a fancy reputation that allows them to charge more than their competitors. Your customers—and their friends and customers—have heard of you. You have a high-end brand. They get value by being associated with your work just like a person gets value from wearing around a $50,000 Rolex watch. The value-based pricing strategy is a nice way of saying you are charging your clients not based on the cost to produce the work, but by the perceived value of your work. The purchase is an emotional one rather than a practical one. If you have won prestigious awards, have impressive certifications or education, have a roster of well-known past clients or have become a celebrity of sorts, you are in a position to charge a lot more than someone offering very similar services.
Pros: High profit margins and potential for income.
Cons: Must heavily invest in branding and advertising. Usually takes time (or a lucky break!) to build up to this model.
How to Get Clients: Advertising, awards, public relations, social media, event marketing, public speaking, podcasting.
10. The Retainer Model
This model is for freelancers who enjoy building strong relationships over time and who excel at customer service. With The Retainer, you’ll have longer-term contracts with your clients to supply ongoing service and support. This makes for steady income and repeatable work, which are both great for scaling. However, be careful not to hire employees just for one client. If your big fish decides not to re-sign your contract, you don’t want to end up having to lay people off or scramble to find another client that isn’t a good fit. A typical retainer engagement is six months or a year and could include any type of service that someone needs regularly such as graphic design, website maintenance, search engine optimization, blogging, etc. You’ll want to build some kind of limits into your agreements to make sure your client doesn’t keep piling on more work every month to the point the retainer isn’t profitable. High-touch, responsive customer service is key for keeping retainer customers happy. Being able to show progress and measurable results will keep your customers coming back.
Pros: Predictable revenue. Predictable client relationships. Repeatable work that lends itself to systematizing and outsourcing or hiring.
Cons: High cost of customer acquisition and onboarding. Can get boring doing the same work over and over for the same people. Must be super responsive, so it’s difficult to take time off or leave your computer.
How to Get Clients: Networking, repeat customers, whitepapers, email marketing, advertising, event marketing, personal connections.
11. The Product Model
This model is good for freelancers who are amazing at what they do but who have trouble with time management or who think their customers are idiots. When you are in a service-based business, project management is a huge part of your job, and you need to work quickly and hit deadlines to make money. Customer service is essential to success, and in the end, your talent matters less than whether your customer is happy. But when you create a product of some kind, you are no longer selling your time. And you are no longer trying to make a specific person happy. You are free to create what you want on your own time. If you can create inspiring products, there is no limit to the amount of money you can make. You’ll spend most of your time creating the thing and less time “dealing with people.” Product businesses can come in many shapes and sizes. Productizing could involve physical products or digital. Here are a few examples: a photographer could sell stock photos, a writer could sell a book, a developer could create an app or a website theme, a designer could create greeting cards. You could also productize a service. For example, you may sell online logo design at a fixed price that includes the exact same thing for every project with very little interaction between the client and yourself. Depending on what you do, you will still have to deal with people at some point, but your success is much more about your ideas and your creative work.
Pros: Easy to start. Low overhead for digital products. Infinitely scalable. Total creative control. Total freedom from the clock.
Cons: Must be extra talented to be competitive and extra disciplined to make money. May take a while to break into a specific field or industry.
How to Get Clients: Trade shows & conferences, PPC, marketplace websites, retailer prospecting, content marketing, event marketing.
12. The Expert Model
This model is good for freelancers who enjoy sharing knowledge and talking or writing about what they do. The Expert Model usually involves selling expertise, rather than a service with cold, hard deliverables. So for example, instead of offering photography services, you might teach other people how to become photographers. You could make money by selling training, consulting or even paid public speaking. You may be able to command a lot more per hour as an expert consultant than you could as a regular ol’ service provider, but your income is still tied to the number of hours you put in. This model may require travel if you plan to do a lot of public speaking in order to reach bigger and different audiences.
Pros: People will pay a lot for your expertise. You become a thought leader in your community or field. You get away from project deadlines and instead work from a calendar.
Cons: Takes a lot of experience before being able to implement this model. Doesn’t scale well.
How to Get Clients: Public speaking, email marketing, podcasting, blogging, social media, event marketing.
13. The Specialist Model
This model is for people who have freelance services to offer and also special interest, experience or expertise in a totally separate industry. Combining the two can create a powerful vertical market and niche. For example, maybe you not only design WordPress websites but your wife owns a yoga studio. You know the ins and outs of her business, so that puts you in an excellent position to design the perfect website—and offer additional services—for other yoga studios. Because you are focused on one specific industry, it makes your services hard to compare with other general providers, allowing you to price higher than you would be able to normally. Your knowledge will get deeper with each client, and you will discover reusable tasks, knowledge and work, making each project more profitable than the last.
Pros: Less competition and easier sales. Easy to target clients.
Cons: The market will be smaller than if you have customers in all industries. Could get boring. Susceptible to macro-economics and industry-specific trends.
How to Get Clients: Search engine optimization, white papers, prospecting, blogging, trade shows, direct mail, PPC advertising, event marketing.
14. The Influencer Model
This model is for the trend-setter type who has been in the industry long enough to have built a significant following or who is famous for some reason. The Influencer Model involves a large online community, so you spend a lot of time posting on social media, responding to comments and creating content. The Influencer could be someone who is a guru (similar to The Expert) or they could just be someone who creates or curates content people like to consume like funny cat videos or cleavage pictures. They may make their money by offering very high-end services (such as coaching), but most of their income is from selling advertising and product placements on their various platforms. They may also license their brand to be used on other products (digital or physical) or sell their email lists to other marketers. The larger the audience they have, the more they can charge.
Pros: Unlimited potential income. Relatively easy work.
Cons: Takes a long time to build audience. Hard to “turn off.” May set yourself up for public criticism.
How to Get Clients: Social media, email marketing, public speaking, podcasting, video marketing, blogging, advertiser prospecting, event marketing.
15. The Agency Model
This is a good model for a risk-tolerant freelancer who has a roster of fancy clients, no trouble getting new work and strong leadership skills. You may need to pony up your own money, get a loan or find investors to get started. Or you could plan to build slowly over time, for example, by starting with The Ring Leader Model and working your way up to employees. An agency could be a full-service marketing agency or just a larger company focused on your specific craft (i.e. videography or copy writing). Either way, this model typically involves hiring employees and getting an office. You’ll stop being a freelancer and become a boss. You may become the project manager, the operations manager, the creative director or the sales person (or some combination of those). You’ll need a high-end brand and will be working with much larger companies who have substantial budgets. You’ll focus on highly customized, large projects and high-touch service. You’ll want to have regular business hours and be in the office most days to manage your team, so you lose a lot of the freedom of freelancing. Because the projects you work on will be higher end, when the economy is booming, you’ll be busy. But when the economy is bad, big companies put marketing projects on hold or find cheaper options.
Pros: Can be very lucrative. You have experts for the tough stuff and interns for the simple stuff. Everyone’s job roles are specific and thus easier to hire and train for. Your projects will be collaborative.
Cons: Expensive! This model doesn’t work well in small towns or rural areas because there aren’t enough high-end clients to support an agency. Susceptible to macro-economic trends.
How to Get Clients: Advertising, repeat customers, prospecting, networking, public relations, event marketing, content marketing.
16. The 1 Day® Model
This business model is for a freelancer who is ready to grow into an agency, but who may not have any current employees. In this model, you work in person or via teleconference with your clients to complete projects in *mostly* one business day. It’s a little bit like using day rate billing. This model could apply to any kind of service, but my agency offers 1 Day digital marketing services such as the 1 Day® Website, the 1 Day® Branding and the 1 Day® SEO. By letting your client be a part of the creative process, you increase their buy-in and keep that scope creep under control. Until you have your own staff, you bring in a team of certified 1 Day freelancers who work alongside you, which helps you control the timing and quality of the deliverables. Because you are working in real time, project management (namely hundreds of back-and-forth emails) are replaced by quick and effective human-to-human communication. You use our proprietary processes and our digital and tangible creative tools to increase efficiency, interactivity, quality and customer loyalty. The collaborative high-energy day fosters trust, mutual respect and camaraderie among the client and the team. You charge a fixed rate to the client and pay subcontractors by the day, which ensures profitability. Because of your unique model and delivery, you can charge much more than your competitors.
Pros: Predictable profits. Easy to sell. Less emails, more fun! Calendar-based schedule allows for more freedom to work as many or as few days as you want.
Cons: Can be stressful with high-pressure deadlines. May not be for everyone. Not every project fits into the 1 Day® Model.
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