Should You Subcontract With Agencies?

Lately, I’ve been in a lot of conversations about the best way for web designers to make the move to go out on their own.

The biggest problem is that the mainstream advice stinks to implement. For example…

Subcontracting With Agencies

One way to get work is to make a handful of relationships with other agencies that either lack your current skillset or that can send overflow work your way.

Your Prices Will Decrease Over Time

On a regular basis, people will tell me that they’ve been working with an agency for years – doing great work – then they get a call saying that they either need to lower their rates or they won’t be able to keep the relationship.

I specifically remember talking to Andrea about this because she was in literal tears and it was wrenching my heart. She’d been working with this one agency for about three years, doing great work, improving her skills over time, and everybody loved her. She had no idea this was coming, but she got a call from her main point of contact at the agency and was told that the agency was having a hard time selling websites at their current prices and they were going to be lowering the price of web design. Therefore, Andrea was being asked to lower her rates too. Otherwise, she’d lose the relationship as the agency wouldn’t be able to make a profit at their new, lower rates.

So, Andrea’s justifiably freaking out on the phone with me because she had taken classes, learned new skills, and actually thought she should get a raise. But, rather than a raise, she has to either lower her rates or lose the work altogether.

What stinks the most is that there’s not a single thing she can do about it.

You’re Not In Control of Your Lead Flow

I believe that if you’re not in control of your leads you don’t actually have a business. In my mind, there is a difference between randomly freelancing out your skills and building a business. Sub-contracting with agencies is not actually putting you in control of your leads, it just moves the problem.

Invariably what happens is you get a few agencies that all need you right now. So, you’re stressed and swamped. You don’t want to say no because then they’ll replace you. What if they like the replacement better than you? Will they send all the work to the new person now?

You can’t say no, but you can’t say yes either. It stinks.

You’re Not Able To Leverage The Value of Your Knowledge

Almost all web designers I talk to severely undervalue their knowledge. Most of the time they give away all of their strategy and consulting for free just trying to onboard the client.

Ironically, the majority of the value is in the strategy and consulting. The implementation is the easy part.

When I say “the majority of the value” what I mean is the difference between a $1,500 website build as a “web designer” versus a $15,000 engagement as a “marketing consultant” who can also build websites.

If you’re not leveraging your knowledge, you’re leaving at least $10,000 on the table with every project.

You’re Not Building Value In Your Business

If you ever hope to sell your business there is almost no value in your business if you’re just freelancing for agencies.

All of the metrics that people look at when acquiring a business are missing. For example:

  • You have little to no recurring revenue.
  • There’s nothing that makes you different or irreplaceable.
  • Virtually all of the value is in your personal relationship with the agency. (That means if you remove yourself from the business the agencies have no reason to work with the new business owner.)
  • There is no projected growth over time. In fact, oftentimes you have to lower your rates. (Remember Andrea?)

By working as a subcontractor you’ve positioned yourself as an easily replaced commodity. That structure has no value. So, to me, it’s not even a business. It’s just freelancing out your time. Where’s the future in that?

The Window Is Closing

The foundational concept behind this entire idea is that you are either providing a skill set that the agency does not currently possess internally or that they can’t easily get from someone else.

With all the advancements in technology, it’s pretty easy to hire someone or just train an employee they already have to build websites. It’s not like 10 or 20 years ago where you had to have a computer science degree to get a website online. A reasonably capable person can learn the point-and-click tools to get a website online in a very short period of time.

So, it’s just a matter of time before the agency breaks ties with you because they either hire a full-time employee or they find a cheaper alternative on Upwork or something. I believe the window is closing on web designers who want to make a living just by subcontracting with agencies.

Take Control Of Your Future

My advice for anyone thinking about subcontracting with agencies is to step back and think about how they can leverage both their knowledge and their skills rather than just freelancing off their time. Your true value isn’t your time. It’s not just your skills either. The most valuable thing you’ve got is your knowledge. So, combine all three of those things together (your time, skills, and knowledge) and that’s how you’ll maximize your earning potential.

 

Niche Mastery

Discover how to tap into the most profitable local markets without limiting yourself to a single industry.

Get the first DoubleStack module for free.
You can send me questions as we work on this together.