Let us guess how you ended up here.
You have a digital project that needs completing. Maybe it’s an app, maybe it’s a chatbot. Maybe it’s a brand new website to make your customers say, ‘Phwoar!’
There’s just one problem: you don’t have anyone in-house to do it.
That’s okay, outsourcing is simple enough, right?
(Source)
The truth is, outsourcing isn’t quite as straightforward as it seems.
The market is saturated with options, and there are tonnes of freelancers on Upwork, Fiverr, and other freelancing sites to choose from – but how do you know whether to trust them?
Then there are agencies. Agencies charge higher prices, but that doesn’t necessarily mean you’re going to get a better product.
How do you make the best decision to meet your company’s software needs?
If you’re struggling with this very question, then you’re in the right place.
We’re here to break it down for you. When it comes to hiring a freelancer vs. software development agency, here’s what you need to know.
4 Key Differences Between a Freelance Developer and a Software Development Agency
1. Price
Let’s be clear – software development agencies cost more than freelance developers.
You can hire Zoho developers on Fiverr for as little as $10 per hour. On the other hand, top-rated freelancers on Upwork cost anywhere between $40 and $150 per hour.
However, if you want to contract a leading software development agency, you’re going to pay a premium.
According to Full Stack Labs, even small class custom software development companies can charge between $75 to $175 per hour, with projects costing between $10,000 to $500,000. Meanwhile, an enterprise-class solution could cost between $250 to $850 per hour or from $500,000 to $100 million.
(Source)
For growing companies seeking business solutions, those prices may be too steep to overcome.
But what makes the price difference so dramatic? Let’s break it down.
Freelance software developers:
- Operate with far less overhead
- Generally are less experienced
- Don’t offer additional services such as business advice, ongoing maintenance, etc.
- Might be based overseas where they can offer more competitive rates
Whereas software development agencies:
- Bring more resources to the table, in terms of larger teams and tech stacks, etc.
- Tend to be far more experienced concerning needs for certain industries, project types, and development methodologies
- Offer encompassing services or packages including business advice, maintenance, hosting, and custom support
- Tend to be based in your neck of the woods where it’s more expensive to run a business vs. freelancing in areas with a lower cost of living
Before embarking on any type of project, it’s crucial to set a budget and then stick to it.
But a whopping 66% of enterprise software projects end up going over budget.
At first glance, hiring a freelancer seems like the cheaper option.
Given this statistic, it’s tempting to always want to gravitate toward the cheaper option.
It’s true that agencies are more expensive by the hour. But this isn’t a simple transaction – it’s an investment, with far-reaching ROI for your business. Which brings us to our next point.
2. Experience
Experience is another important consideration to keep in mind when you need to decide between hiring a freelancer or a software development agency.
Freelance developers generally specialize in one area of software development. They are usually highly experienced in one or a few different programs, languages, or processes.
Meanwhile, an agency will be able to deploy a team of experts skilled in numerous programming languages, styles, and methodologies.
With an agency, you’re not wedded to one person’s thinking or experience: they’ll sub in the best person for each aspect of the job, and they will manage that process for you.
This can provide a number of benefits for your project including:
- You won’t have to be as hands-on with project management the way you would with a freelancer
- Delivery is often faster because of agencies’ efficient processes and ability to deploy multiple developers at once
- You’re more likely to receive strong business advice because of the breadth and depth of industry knowledge available
When faced with choosing the right software development company or going with a freelancer, your decision may often come down to which one is the right fit for the job, which usually means do they have the necessary skills required to complete the work on time and within budget.
If the option you choose doesn’t have the chops, then you could face a serious financial dilemma.
Which leads us to another big difference between freelancers and agencies.
3. Risk
When hiring a freelancer, it can be hard to ascertain how reliable they are.
An agency can show you testimonials, put you in touch with other clients, and refer you to their dedicated customer services team.
Vetting freelancers, particularly through platforms like Upwork or Fiverr, is more difficult and more risky.
Yes, these sites have rating systems, but like with Uber ratings, not everyone uses them the same way.
One company might dock a star because they missed an email; another might do it because they delivered a buggy final product – and you won’t know which it is.
With a freelancer, you also don’t have much of a contingency plan if things go wrong. What if they’re not a good communicator, or bite off more than they can chew with other clients?
(Source)
Let’s say you do find an amazing freelance developer and it’s all going swimmingly, but they get in an accident or get ill. It’s no one’s fault, but the project’s on hold anyway.
The average software development project takes around 4.5 months to complete. That is already a long time, and time is money.
The longer you have to wait to deploy your software due to delays, accidents, or mishaps, the greater the cost to your business in terms of project cost and potential lost revenue.
With an agency, this risk is mitigated by the fact that they have a larger team and dedicated project managers to make sure your project is going to continue on schedule.
A good software development agency will also offer you more assurances for the services you purchase. For instance, it may provide an agile development plan, so that if something big changes in the middle of your project you can adapt to it together without incurring unforeseen costs.
4. Ongoing support
We all know that when it comes to software development projects, the launch is by no means the end.
Freelance developers will likely include some time for post-launch bug fixing in their initial quote, but the more complex your project, the more likely it is that you’ll be paying out-of-pocket for additional maintenance.
When it comes to software development cost and ROI, it’s worth investing in the longer-term services that come standard with a software development agency.
Software development agencies come with numerous ongoing support structures including:
- A technical support desk
- Marketing advice post-launch
- Bug fixes and improvements
- Planning and consulting for future projects
It’s pretty clear that when you hire a freelancer vs. a software development agency, you’re not getting as much value for your money, but let’s break down the specifics.
Pros and Cons of Hiring a Freelance Developer
| Pros | Cons |
| They’re usually cheaper by the hour | Costs can rack up, particularly if the project takes longer than expected |
| They’re flexible and can respond to urgent tasks quickly | There isn’t a contingency plan if they hit an obstacle or take on too many projects |
| You have a one-to-one connection with the person doing the work | They offer less project management and customer service capabilities |
| They have a narrower base of expertise | |
| You have to spend time onboarding them | |
| You have to protect yourself legally by drawing up the contract or NDA yourself |
As you can see, there are pros and cons to hiring a freelancer.
While there are serious risks and drawbacks involved, hiring a freelancer might be perfect for you if:
- You already have some in-house development capability and just want to supplement your existing infrastructure
- It’s a smaller project, like making a change to your CMS or adding a feature to your app
- You’re a small company with a very limited budget
If you do decide to hire a freelancer, here’s our advice.
1. Don’t just go for the cheapest one
You get what you pay for, so shop around to find a developer whose services will give you the best value for your budget.
The cheapest options might be outside your geographical region, in which case you may be dealing with a time difference or a language barrier between you and your developer.
This can work, but you need to make sure that you have strong channels of communication in place and that your vision for the project is aligned from the get-go.
| Region | Average software development hourly rate |
| North America | $55 |
| Western Europe | $66 |
| Eastern Europe | $37 |
| Latin America | $50 |
| Asia Pacific | $28 |
| Africa | $31 |
(Source)
2. Ask for testimonials from other clients
Look for clients who are similar to you.
If you can, speak to them and ask about your freelancer’s communication style and how they respond to issues.
Don’t just focus on the negative reviews either.
Reach out to positive reviewers to determine what made that client’s positive experience with the freelancer so memorable.
3. Ask to see examples of their work
Sometimes, the best way to determine if a freelancer has what it takes is to examine their work.
Ask the freelancer if they have worked on similar projects before.
If so, see if you can get a copy of the work they did, or ask them to explain how they can apply those same principles or procedures to your project.
4. Make sure they have a deep understanding of the project’s purpose
An oft-forgotten aspect of many projects is the human side of software development.
Ultimately, you’re going to want to work with someone who understands your vision and reflects your company’s values.
When you work with a software development agency, you get access to a diverse team that can help to support and grow your vision.
A good agency will be able to look beyond the brief and take a holistic view of your project and business to respond to challenges and make recommendations that are in the best interests of your clients.
The best freelancers will do the same thing.
Pros and Cons of Hiring a Software Development Agency
Hiring a freelancer vs a software development agency is like getting a push-bike instead of a chauffeur-driven car: it’s got wheels, sure, but you’re responsible for making it go.
It’s harder work, and you might get to your destination later than expected, if you get there at all.
That said, hiring a software development agency isn’t the right choice for every business. Here are some of the pros and cons you can expect if you decide to hire an agency for your next project:
| Pros | Cons |
| Measurable ROI due to the diversity of skills that will be applied to your project, which may save you money in the long run | Higher upfront cost |
| More chance of projects running to time | Might be overkill if you’re only working on a small project |
| More opportunities for business advice and better industry knowledge | |
| Expert project management | |
| Less legal risk and hassle as they will have their own legal departments and contracts |
Really, the key thing you’re getting from an agency is expertise, not just in software development, but project management.
This might sound boring, but poor project management loses organizations US$109 million for every US$1 billion invested, so you’d be foolish to overlook it.
At Human Pixel, we’ll assign you a dedicated project manager, who will:
- Closely evaluate your processes
- Adjust your digital project to meet your needs
- Provide industry knowledge and experience
- Help you take advantage of our flexibility and integrated service offerings
- Coordinate ongoing support post-launch
Why You Should Consider Choosing a Software Development Agency For Your Next Project
For big projects that will make a real difference to your business, it’s not only a safe choice to go with a software development agency over a freelancer, but a smart one.
At Human Pixel, we’ll dig deep into how your business works, tell you exactly what software you need to make the biggest impact, and then make sure your project goes off without a hitch.
You’ll get a fully-fledged project with experienced business advice, not just the raw development power, and you have a far higher chance of seeing it completed on time and within budget than rolling the dice on a freelance developer.
Book one of our Discovery Workshops today to get started.
About Author
