Ever wondered how to price your services when using subcontractors? The hosts dive into optimal strategies for managing these relationships. They recommend a minimum 30% markup to cover risks and project management duties. Discussion highlights the importance of having separate contracts for clients and subcontractors to clarify responsibilities. Clear communication is emphasized as a key to success in these arrangements. Get ready to elevate your freelance game with these insightful tactics!
Freelancers should upcharge clients by at least 30% when subcontracting to account for added management and risks.
It's essential to create separate contracts for clients and subcontractors to clarify responsibilities and minimize potential liabilities.
Deep dives
Charging Appropriately for Project Management
When managing a project that involves subcontracting, it's advisable to charge more than the base cost provided by the subcontractor. For example, if a web development agency quotes $1,400 for a project, it's reasonable to increase the fee to $1,600 or even more, recognizing the added responsibility of managing the project. Experts suggest an upcharge of at least 30% is justified, especially considering the risks and additional effort required to ensure client satisfaction. This adjustment reflects not only the management required but also the assumption of legal and operational risks involved in the collaboration.
Understanding Contractual Obligations
In scenarios where a freelancer collaborates with subcontractors, there should generally be two contracts: one between the freelancer and the client, and another between the freelancer and the subcontractor. This structure ensures clarity regarding responsibilities and liabilities, minimizing potential risks. While clients do not need to sign multiple contracts, proper agreements should be established to delineate the roles and expectations of each party involved. This contractual clarity protects freelancers and helps to streamline communication in case variations occur throughout the project.
Risk Management in Subcontracting
Freelancers assume significant risks when they take on projects involving subcontractors, as they are ultimately responsible for the client's satisfaction and project delivery. Inadequate management or issues arising from the subcontractor's end can lead to complications for the freelancer. Therefore, it’s crucial to establish protocols within contracts that address what happens if obligations are not met, ensuring that the freelancer mitigates potential liabilities. By clearly defining these aspects, freelancers enhance their operational readiness and protect their business interests while working with subcontractors.
On today’s show: if you work with a sub-contractor, something we highly recommend—how much extra should you charge your client? And do they have to sign two different contracts?
That’s what Kiki asks us in this Q&A episode of Freelance to Founder. Here we go…
This episode was originally aired on June 21, 2022.
To submit your question, visit FreelanceToFounder.com/ASK, and we'll feature you on an upcoming episode.