Ask HN: The case for middle men in freelancing, do agents exist? | Hacker News Reader

Ask HN: The case for middle men in freelancing, do agents exist?

26 pointsmittermayr35 comments

As a self-employed senior software developer, I mostly live off selected freelance work, aside from varying income through SaaS products and apps. I get 100% of inbound work through recommendations in my personal network. Because of that, I have never had a rate negotiation, had to pitch my skills or expertise, or bid against others.

But, sometimes, I go WEEKS without a single hour billed.

Other times, I need to decline two projects at once because I am still knuckle-deep in another one. Which reminded me of "agents" as a concept:

I think I would be happy to pay someone a fee for managing inbound work (on my terms). The TV (script or talent) agent model comes to mind: they try to fill up your unbooked time with projects that match your criteria. For each booked gig, they get a fee.

Does that exist? Would that even make sense in software development? The main argument against it seems to be developer hesitance against out-of-network clients (and risk), and the agent over-promising on both ends to make the deal happen.

Sites like UpWork don't really solve this (for me), because I don't want to compete just on price and star ratings. If I had to compete with a 100,000 developers out there who charge 1/10th of my price, it'll be tough (clearly a first world problem, I am fully aware of it).

I am really curious how you handle this. I am trying to cap freelance work at 50% of my week, with most projects < 6 months, ideally.

I worry what will happen if my network stops delivering work, and I already worry about managing the inconsistent volume coming in.

Like, a load balancer for project work. Thoughts?

You’ll find these four models:

Traditional recruiters. Focused on f/t placement, paid by employer, usually geographically specialized. Barrier to entry low for this career so finding a great recruiter takes time and effort. Some recruiters will do gig/freelance placement but generally that’s not their strength.

Outsourcing firms, development shops, sometimes called “body shops.” Have their own pool of talent on their payroll. Fill seats at companies and/or take on projects. Often taking up to 50% of gross. May specialize geographically or in specific verticals, i.e. government jobs.

Online gig services, e.g. Upwork, Fiverr. More or less a self-matching service with an auction model, like eBay for gigs and talent. Main value-add is breadth of gigs and talent and handling at least some of the billing/payment process. Rates often far below local market because of global competition.

Agents, e.g. 10X Management. Do not employ talent themselves, but represent freelancers/consultants like an entertainment or sports agent. Responsible for marketing, contract/legal, billing/payment, and dealing with conflict. Take a percentage of gross.

Toptal has some attributes of the agent model and some attributes of the outsourcing firm model — I’d call them a hybrid.

Disclaimer: I have tried all of these models during my career. 10X Management has represented me since 2013.

Since you’re close to 10X Management, do you know (or could ask) whether they’re doing anything in the UK/EU market? Last time I checked them out I got the impression it was primarily US-only.

I believe 10X has customers internationally. I worked on a gig for a company in Shanghai through 10X.

In my experience US tech jobs pay more than almost anywhere else, and demand in the US exceeds supply of talent, so US-based companies offering consulting and outsourcing may not have much incentive to look for customers in the UK/EU because rates/salaries are significantly lower there. Tax and labor law issues may present problems in some cases too, I don’t know.

Thanks for a lot for the insights on this, second mention of 10X, seems interesting indeed and pretty much what I had in mind originally.

I have some free (no ads, popups, or affiliate links) articles about freelancing on my web site typicalprogrammer.com

It’s basically how almost all freelancers get work in Sweden, via “consultant brokers”.

Basically a bunch of sales people whom you call and say “I want an assignment and I know X, Y and Z” and they hook you up with an assignment in exchange for 5-15% of what you invoice.

I’ve been using them ever since I started in 2018 and never spent more than 1-2 hours to land a 6+ months long assignment

For real? How have I never heard of this? Is this a Swedish-only thing? That's super interesting, thanks for sharing.

The downside is they make it hard to enter the market as they gatekeep. And clients (especially bigger ones) don't want to deal with individuals at all because of the brokers.

They also sub contract to other contracting or consulting companies.

At the end of the day I'd say I'm quite insulted by the concept. They really treat developers like a commodity to be pimped out.

Meh, I make more than double take home money compared to the same job as a employee while not having to buy into the company “””vision””” and attend all hands and town hall meeting.

wiping_tears_with_money.gif

It’s a thing in most EU countries AFAIK. These guys are one of the biggest (but by no means the best): https://www.eworkgroup.com/en

Similar thing in Germany and Switzerland.

i tried this once when i was in europe and they wanted to pay me 1/2 or 1/3 of what they were billing the client. and you had to work on site like an employee.

Same in Denmark.

Yes, they exist as the principals of multi-employee consulting firms. Keeping the worker bees busy is what a principal does if they are successful.

It's really the only model that works because having a stable of happy clients means managing production work to keep them happy. At scale, the only way to do that is control of resource allocation and the ability to scale up when called for.

The entertainment industry is not a good analogy because there is big money floating around looking for projects and projects are largely similar affairs with stable institutions supporting them like unions, guilds, and prop houses.

Maybe if I squint, I can see the principal of a consulting firm as the equivalent of a Producer, and that leads me to suggest marketing yourself to existing consulting firms as a scale-up-and-scale-down option.

I sometimes get about 20-30% of my work by knowing the CEO of a consulting firm, yes. Anything they don't have over-night resources for, they redirect to me. So that part definitely rings true.

I haven't tried them yet but 10xmanagement is pretty much exactly what you're describing. They get mentioned here from time to time. The model always sounds great to me.

https://10xmanagement.com/

Interesting, sounds similar to toptal.com — the website feels a bit landing-page-ey but I guess they don't need much if the work happens in the background anyways. Haven't heard of it before, will look into it, thanks!

Out of the 9-5, we as freelancers or self-employed are all facing same problem: the ups and downs of the workload. And if you, like me and others, are counting on the steady stream of income to cover expenses, those gaps/downtime are horrible.

For the past several years, I've been relying on Upwork for work, and found that it's actually not that bad. Just like in the talent pool there are great freelancers and mediocre ones, there are high end clients with good projects and pay, and they try to stand out from the pack as well.

Think about it, the kind of agents that you are thinking about, who can broker work/projects between a certain type of freelancer(skills, pay, etc) with a matching type of clients, are going to be expensive and perhaps in high demand. That would be another problem you need to solve.

That's the problem platforms like Upwork is trying to solve. For me, they have a good enough solution for me to use their service. They are the agent for me.

Upwork works more like an auction than an agent. They don’t look after your best interests. Upwork doesn’t vet the buyers or sellers, instead relying on a reputation system that people learn how to game. I think it’s very hard to get a good rate on that platform because competition is always most fierce at the low end.

I’m sure it’s possible to make a decent living on Upwork but you would have to put a lot of effort into that.

Thanks for sharing your Upwork experience, I have used them many times as a buyer but always felt it must be relentless to survive as a bidder there. I probably underestimate the work available that is not just optimizing on price when looking for a freelancer.

i wonder how succesfull you can be charging good rates above $400 hourly through that platform.

now I'm curious, are you charing more than $400 per hour for software development/architecture?

Software architecture sounds doable but only if clients value it.

I’ve seen (or made) mistakes before that I could warn you about and it would save you orders of magnitude more than paying a few dozen hours at that rate.

10X Management represents programmers with in-demand skills. 10X has represented me since 2013. They have consistently sent good gigs my way and taken care of the marketing, legal/contract, and invoicing/payment side for 15% of gross. Generally they negotiate higher rates than I used to get on my own. I can decide which gigs I want to take.

http://www.newyorker.com/magazine/2014/11/24/programmers-pri...

Toptal works more like a traditional outsourced development shop than an agency, you might want to look at them. I haven’t worked through Toptal but friends who have or still do report consistent work but sometimes complain about low rates. Toptal reportedly requires getting through a challenging vetting process.

I took the simple route: I am an employee at the cloud consulting division of one of the major cloud providers.

I get all of the benefits of consulting - remote work, varied projects, direct customer interaction, decent compensation (about 10%+ less at each level as the equivalent SDE).

I also don’t have to hunt for clients or prove myself. They automatically trust that I know what I’m talking about since I work for their cloud provider.

Yes, I could probably make more going independent if I had the network. But I make more than enough now.

As an aside: I have a firm rule against staff augmentation “consulting”. While I am hands on, my goal is to level up clients, “teach them how to fish” and put myself out of a job.

A challenge is having the person estimate the projects and writing the bid proposals has to be technical.

A common pattern is someone like yourself becoming an agency by trusted hiring out to a group of freelancers. Overtime you become management, dealing with the clients and your crew of freelancers.

Our you could find one of these “hub” type people and get into their talent pool.

I was thinking about this and even tried to create a product around it. I named it a collaborative marketplace, where people collaborate to make money. Salesmen need something to sell, freelancers need more clients. This has to be a commission based, as the freelancers are not going to pay anything in advance.

Yeah I wouldn't pay in advance either, true. It's much easier to treat part of the project fee as commission, and I wouldn't mind paying that if the projects keep coming and clients and everything work out nicely. It would be a deserved fee for sure.

i think that your rate should take into account any down time.

the problem is that engineers charge rates that are too low in general. if you do the math you should be somewhere around the $500/hr figure if you are on the west coast. i fear that most people bill lower than that. which is a problem…

i think the agent model makes a lot of sense. the problem is that they have to be able to sell your value and actually do the work instead of waiting for you to do it and collect a %. another challenge i have firsthand noticed is if the agency has its own employees they might give them the work first, even if they do not have the skills. still not sure what to do with that one.

juggling multiple projects at a low rate sucks, i have been through that and have no interest in doing that again. i just want to do one thing and charge a realistic rate to stay in business. the alternative is fixed price projects but then you take on a big risk potentially….

Downtime is caused by your own failure to market/sell yourself, you can’t charge your customers for that.

Anyone who can get $500/hr freelancing already has a reputation they can leverage and shouldn’t have any trouble finding work. For everyone else charging the more typical $60 to $200/hr finding consistent projects with quality customers presents a challenge.

In freelancing reputation counts for a lot. A good agent can multiply that with their own reputation. A true agent does not have their own employees competing with freelancers they represent.

no, downtime is going to happen sooner or later regardless of your own marketing because customers might suddenly decide to hire someone else or the project might be cancelled last minute etc.

the mindset of "I can only charge $60" is exactly the problem. you cannot sustain a living on that hourly rate on the west coast, not even at $100 or $150. do the math.

I was born in California and lived there for much of my life, including living and working in San Francisco and Silicon Valley.

Downtime can happen but if a freelancer experiences frequent or prolonged downtime that’s their own failure to cultivate multiple customers, long-term relationships, reputation, and a funnel of work. Of course customers may cancel a project or hire someone else, but a freelancer who pays attention and has a relationship with their customer beyond sending invoices will have some notice of that happening. Personally I have not had downtime as a freelancer for at least 15 years.

$500/hr is full-time equivalent of $1 million/year, far above the average or necessary living wage for Santa Clara county (just over $50k/year, or $25/hr full-time)[1]. Across the US freelance programming and system admin rates range from about $50/hr to $250/hr, with some outliers at either end [2]. Very few freelancers are making $300+/hr consistently, though I know some do because they have very specialized skills, solid reputations, and can keep their funnel primed. Rates are higher for Silicon Valley/SF/LA (and NYC) but not 10X higher. And as a freelancer you don’t have to live where your customers are, so I can work for companies in SF or Chicago or Silicon Valley and live in a cheaper city, or not in the US at all.

You certainly can sustain a living anywhere in the US for as little as $60/hr, which is $120k/year full-time equivalent, well above the living wage for any American city including Santa Clara county. That’s the low-end, though. Most freelancers I know, and I’ll include myself, charge $150 to $250/hr and get that consistently from US customers for 30-40 hrs/week. That’s more than enough to live comfortably wherever I want.

The key to consistent income as a freelancer is not jacking up rates to account for downtime, but not having downtime in the first place. The best way to avoid downtime is to build long-term relationships with customers so replacing you (because you’re crazy expensive) doesn’t come into their thinking. Charging a little more than they would have to pay a f/t employee is the sweet spot. I have freelanced for customers for over a decade, at very good rates, because they can’t hire a f/t equivalent for any number of reasons.

Here’s the big secret of successful freelancing. Don’t build your freelancing practice around constant churn with short-term projects. That keeps you in perpetual search/sales mode, which you don’t get paid for, and prevents establishing long-term relationships with customers. Instead build your practice on retainer arrangements with a few steady customers, where you add sufficient value and the customer has a predictable fixed monthly cost. Customers always prefer predictable fixed costs over unpredictable invoices, and they always prefer someone committed to their business over someone who wanders from gig to gig looking for the best rate.

[1] https://livingwage.mit.edu/counties/06085

[2] https://www.glassdoor.com/Salaries/los-angeles-freelance-sal...

I recommend you sit down and do the math, assuming you are based on the west coast in LA or the valley, and need to make a living, save for retirement, pay your taxes, put kids through school, account for the possibility you might become ill or disabled, and more. It's clear you have no idea what it costs to be self employed.

I’m glad it’s clear to you that I have no idea what it costs to be self-employed on the west coast, since I already posted that I’ve been self-employed for 15 years, on the west coast. I’ve raised three kids too. It doesn’t cost a million dollars a year. Lots of people manage on less than $100K/year, which is $50/hr working full-time.

I’m not sure what you’re arguing about. I don’t have a mindset of “I can only charge $60,” you put that into my mouth. Freelancing rates for programmers and system admins range from $60 to $200/hr, across the US, higher in some regions than others, and more or less depending on skills, demand, and the freelancer’s ability to sell themselves and negotiate. Yes, I know some freelancers get a lot more than $200/hr, but they’re rare. For every one of them you can find 1,000 freelancers on Upwork competing for $25/hr gigs.

I certainly could live comfortably in the Bay Area or LA on $100 - $150/hr if I could do that for 40 hrs/week — that’s $200k - $300k/year. That would include the taxes and savings and insurance too. I know because I’ve done it. With kids.

You wrote that downtime is going to happen sooner or later. That hasn’t been my experience. If a freelancer has prolonged or frequent periods of downtime they’re doing something wrong, because the work is there, demand far exceeds supply. I’ve worked professionally as a programmer, system admin, and team lead for over 40 years, so I can say confidently that there’s never been as much work available as now.

A professional freelancer has to maintain and constantly upgrade their skills and target the market so they can get premium rates, above $60/hr. They also have to cultivate their professional network, maintain a reputation, and do everything they can to avoid downtime and non-billable hours spent looking for customers and bidding on projects. In another post I wrote that one way to do that is to develop long-term relationships and negotiate monthly retainers, which may be a little less per hour but prevent downtime and uncertainty.

While I do the math you should do the research. I have a fairly good idea of freelancer rates in the US because I’ve been doing that for a while. But don’t believe me — data is easy to find.

https://www.upwork.com/resources/how-much-do-freelancers-mak...

https://hubstaff.com/time-tracking/average-hourly-rates

https://www.statista.com/statistics/1181210/tech-startups-ho...

https://www.codementor.io/freelance-rates/full-stack-develop...

Etc.

Thanks for the math lesson and ad hominem.

Recruitment agencies don't exist in your country?

https://www.jobserve.com/gb/en/JobSearch.aspx?shid=2894DD3A5...

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