Report says freelancers cost more than employees: if so, are you charging what you’re worth?
A recent study by Capital on Tap, “The Cost of Hiring Freelancers Vs Employees,” has revealed a surprising trend: freelancers are often more expensive than full-time employees across many roles. This challenges the common assumption that hiring freelancers is always the more budget-friendly option. However, there are some freelance roles that are nearly the same as salaried employees, which puts into question if these freelancers are charging enough.
The study, which analysed 30 common job roles, found that freelancers commanded higher hourly rates in 29 of them. This difference was particularly noticeable in areas like legal consulting, photography, and voiceover artistry, where freelancers charged over 100% more than their employed counterparts.
| Rank | Job Role | Average Freelance Hourly Rate | Average Employee Hourly Rate | Percentage difference |
| 1 | Legal Consultant | £99.06 | £16.00 | 144.38% |
| 2 | Photographer | £65.69 | £14.67 | 126.99% |
| 3 | Voiceover Artist | £52.92 | £14.67 | 113.20% |
| 4 | Human Resources Consultant | £48.80 | £20.67 | 81.00% |
| 5 | Business Consultant | £46.67 | £18.67 | 85.71% |
| 6 | Public Relations Consultant | £40.86 | £19.33 | 71.53% |
| 7 | Copywriter | £40.45 | £16.00 | 86.63% |
| 8 | Blog Writer | £39.35 | £14.67 | 91.40% |
| 9 | Content Writer | £39.33 | £14.00 | 95.00% |
| 10 | Technical Writer | £37.24 | £20.00 | 60.23% |
| 11 | UX/UI Designer | £35.76 | £27.33 | 26.72% |
| 12 | Project Manager | £34.98 | £24.00 | 37.23% |
| 13 | Translator | £34.71 | £13.33 | 88.98% |
| 14 | Accountant/Bookkeeper | £33.67 | £13.33 | 86.52% |
| 15 | Digital Marketer | £32.16 | £18.67 | 53.09% |
But why is this the case? While freelancers may seem like a cost-effective choice at first glance, businesses need to factor in a range of additional costs associated with employing staff, such as:
Sick pay: Employers are legally obliged to pay Statutory Sick Pay (SSP) to eligible employees. Freelancers, on the other hand, are responsible for their own income during periods of illness.
Pension contributions: Employers must enrol eligible employees into a workplace pension scheme and contribute towards it. This is another cost that businesses don’t incur when hiring freelancers.
Employee perks: Bonding days, conferences and events, holiday parties, health and life insurance
Overheads: Office space, equipment, and other overheads contribute to the overall cost of employing staff. Freelancers typically cover these expenses themselves.
Roles where freelance rates are most similar to employee costs
Although freelance rates are predominantly much higher than that of full-time employees, the percentage difference between the two is much smaller in some job roles.
| Rank | Job Role | Average Hourly Freelance Cost | Average Hourly Employee Cost | Percentage Difference |
| 1 | Illustrator | £18.00 | £23.43 | 26.22% |
| 2 | UX/UI Designer | £27.33 | £35.76 | 26.72% |
| 3 | IT Support Specialist | £16.67 | £12.08 | -31.92% |
| 4 | Project Manager | £24.00 | £34.98 | 37.23% |
| 5 | E-commerce Specialist | £15.33 | £23.14 | 40.57% |
So, what can freelancers in the UK take away from this?
Understand your value: The data clearly shows that businesses are willing to pay a premium for specialist skills and a high level of expertise, even when factoring in employee-related costs. Use this information to confidently negotiate higher rates, particularly in in-demand fields.
Emphasise your strengths: Don’t just focus on your hourly rate. Highlight the value you bring to clients – your flexibility, efficiency, and specialist skills, combined with the cost savings on sick pay, pensions and overheads, can justify higher costs. Is what you are providing going to give the client lasting results? For example, much-improved data analysis, cybersecurity or an advert that revitalises a brand and its sales?
Specialise: The roles with the greatest price differences are those requiring niche skills. Consider specialising in a high-demand area to maximise your earning potential.
Don’t undersell your services: Many freelancers undervalue their services due to perceived competition. This report demonstrates that businesses are prepared to invest in quality, so don’t be afraid to charge what you’re worth.
Factor in all costs: Remember that your hourly rate needs to cover more than just your time. Include expenses like taxes, insurance, marketing, and professional development when setting your rates.
What to factor in beyond the hourly rate
While the report focuses on hourly rates, consider other factors that contribute to your overall earnings:
Project-based pricing: For larger projects, consider offering project-based pricing instead of hourly rates. This can lead to higher overall earnings and provide more clarity for clients.
Value-based pricing: Focus on the value you deliver to clients rather than just the time spent. If you can show a significant return on investment, you can command higher prices. This means getting these measurables from existing and past clients. If not in stats in referrals and positive feedback.
Recurring revenue: Cultivate long-term client relationships and offer multiple services to ensure a steady stream of income.
By understanding the true cost of hiring freelancers, you can confidently position yourself as a valuable asset and secure the compensation you deserve.
With signs of major pauses in hiring in the UK at the start of 2025 due to higher employer national insurance tax, clients will be slow to make any hiring decisions, including those for freelancer or contractor short-term projects. That is why it is important to keep tabs on multiple industries and markets where you can provide your expertise.
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