Freelancer vs Agency: Revealing Main Differences and Success Stories

February 13, 2025

The main differences between a freelancer and an agency are:

Freelancer

Independent contractor with specialized services

Limited projects

Flexible pricing & more affordable rates

Works anytime, anywhere

Increased income through subcontracts

Direct responsibility for outputs

Agency

Multiple employees with generalized services

Multiple projects

Fixed pricing & higher service rates

Has set work schedules

Revenue growth by hiring more employees

Distribute accountability to the entire team

Freelancers provide more personalized services because of direct client interaction. They have more freedom to choose their clients, niches, and schedule. In contrast, agencies provide packaged services. They manage more projects and clients because of a diversely skilled workforce.

As per Latasha James, choosing between being a freelancer or an agency is personal and should align with your long-term goals. An agency is easier to scale but can be expensive. Being a freelancer entails more personal branding but can be difficult to grow.

Vince Opra says that freelancing requires lower startup costs. But, potential income depends on your available time. Running an agency means having more freedom and growth potential. But, it entails lower profit margins and more complex operations.

Freelancers are in demand because businesses need individuals with specialized skills. Fiverr reveals that 78% of companies use freelancers instead of hiring full-time staff. Agencies are popular among medium and large businesses. A Clutch survey shows that over 80% of companies outsource critical tasks to agencies.

I've been a freelancer and an agency owner before running my online business. So, I know the advantages and drawbacks of both models. Common freelancer problems include high client expectations, inconsistent income, and time mismanagement. Agencies experience issues with talent acquisition and retention and staff communication. That's why I switched to a business model that gives 100% operational control. I've been making significant passive income since 2014.

This article talks about the distinct differences between a freelancer and an agency. We dive into factors like business structure, pricing, and growth potential. We also feature top Reddit and Quora success stories. Finally, we discuss the best online venture in 2025 and beyond.

Freelancer vs Agency: Main Differences

Freelancer

Agency

Structure

A freelancer provides specialized services as an independent contractor. He/she performs all client-related tasks.

An agency is a company that offers more generalized services. It has multiple employees with defined roles.

Workload Capacity & Resources

Freelancers handle limited projects and clients, depending on individual capabilities. They use their skills and personal/free tools.

Agencies manage multiple large and small projects. They maximize employee specializations and expertise to acquire more clients. They also use different tools and systems.

Pricing

A freelancer has a flexible pricing structure. He/she offers more affordable rates because of lower initial costs.

An agency has a more structured and usually fixed pricing model. It has higher service rates because of operational costs like labor, tools, and many more.

Flexibility

Freelancers work any time and day, depending on the client's time zone and project deadlines. They have more flexible schedules. However, setting time off and sick days can be challenging.

Agencies have a set time frame for completing client tasks. They can offer 24/7 services because of project delegation. But, they're more prone to client communication issues. It's because multiple people handle a single account.

Scalability

A freelancer earns more by getting more clients or projects. They can subcontract to provide more work hours. But, this setup can lead to substandard outputs and communication problems.

An agency can easily scale its operations and revenue by hiring more employees. This way, it can accommodate more clients and diversify its service offerings.

Accountability

Freelancers have direct responsibility for the quality of their outputs.

Agencies distribute accountability to the entire team. They have project managers who oversee employee productivity and work quality.

Freelancer vs Agency: Top Reddit Success Stories

These Redditors found success with their freelance journeys. One individual earns $75K to $80K with freelance coding tasks. He focuses on understanding client needs and wants and delivering a targeted solution. Another Reddit user achieved a successful freelance career with Upwork. He started working on different tasks at a $3 per hour rate. Today, he makes $65 to $100 hourly with fractional CFO and consulting services. His strategy hinged on creating offers that clients wanted.

Redditor freelancing success story
Reddit Upwork success story as a freelancer

Agency owner and Redditor Jake Hundley revealed making a $500,000 annual gross profit. He plans to grow his revenue to a million. Another Redditor posted earning over $3 million in revenue. This person has been providing networking and sales services at an agency for over 21 years. He advises others to improve brand awareness to achieve greater success.

Redditor agency owner success story
agency owner posting on Reddit about success story

Freelancer vs Agency: Top Quora Success Stories

Quora user Danny Margulies earned over $115,000 freelancing on Upwork since 2013. He accepted freelance tasks for a $15 hourly rate. Danny became successful even with no experience. Another freelancer, Abd Raaz, revealed earning $8K to $12K monthly. He started with $30K in total revenue in 2020. In 2021, he scaled his income to around $5K to $7K per month.

Quora user Danny Margulies Upwork success story
Quora user Abd Raaz freelance success story

Quora user Chandeep Khosa shared his web design and development agency success story. He's been running an online agency since 2006. Because of this, he earns more while traveling and working remotely.

Quora user Chandeep Khosa on being a successful agency owner

Freelancer Income vs Digital Marketing Agency Scalability

Freelancer income range from $31,000 to $275,000 yearly. As per Upwork, it averages at $99,000 per year in the US. In contrast, digital marketing agency scalability is high, from $300K to over $5 million per year. Top-performing agencies earn $1 billion to over $3 billion in annual revenue (Mosaic). Some well-established ones are Publicis Worldwide, Ogilvy, and Epsilon.

Freelancer rates depend on skills, experience, niche, and service offerings. According to ZipRecruiter, freelancers charge an average of $48 per hour. This can go as high as $55 to $60 for complex roles, like software consultants and web developers.

Agency rates hinge on industry reputation, client portfolio, specializations, and talent pool. They charge around 10% to 20% of the total value of the service they provide. For example, social media marketing agencies charge $650 to over $20,000 per project (LYFE Marketing). They handle multiple client assignments in a year.

Agency Pros and Cons

Agency Pros

Ability to scale with more projects and clients

Consistent income and employee benefits

Less task pressure because of team collaboration

Have reliable resources and networks

Agency Cons

High client expectations from deliverables

Lower profit margins because of ongoing operational expenses

Talent acquisition and retention challenges

Lack of consistency because of multiple and diverse employees

Some popular niches for agencies are:

  • Recruitment and staffing
  • Content creation
  • IT and cybersecurity
  • Website design and development

An agency is a business entity that offers specific services for a company. It comprises multiple individuals with different skill sets working under a single organization. Agencies offer individual and packaged services. They have project-based, monthly, and tiered pricing. Their work standards, resources, and tech stacks drive most clients to choose them. Agencies can handle complex tasks because of their extensive workforce.

Freelancing Pros and Cons

Freelancing Pros

Freedom to set their work hours

Opportunity to establish premium rates based on specialization and skills

Work from any location (Ex: at home, coffee shops, while traveling, etc.)

Ability to choose their clients

Freelancing Cons

Limited number of clients at the same time

Intense competition in the freelancing industry

Lack of benefits like healthcare and vacation days

Inconsistent income because of short-term projects or one-time services

Some of the best niches for freelancers are:

  • Virtual assistance
  • Digital marketing
  • Copywriting and technical writing
  • Graphic and video editing

A freelancer is an independent contractor who directly negotiates with a client. He/she provides skill-based specializations and services. A freelancer should have a contract to establish parameters for his/her services. These individuals set their pricing based on their expertise and previous experiences. Most freelancers are paid per hour or per project. Well-known platforms for freelancing are Upwork, Fiverr, and PeoplePerHour.

Is a Freelancer a Business Owner?

A freelancer can be a business owner, but not in the legal sense. Freelancers are similar to business owners in terms of:

  • Acquiring and retaining clients
  • Managing the overall operations of a business/freelancing project
  • Having time freedom and flexible setups
  • Setting service rates or pricing

These Redditors commented on the similarities between a freelancer vs business owner. One individual revealed how he started a "freelance agency" from a side gig. He hired full-time workers when he contracted five clients simultaneously. The other Reddit user compared freelancing with a sole proprietorship business. He said that the two terms refer to someone running his/her own business alone.

Redditor transitions fom freelancing to being a business owner
Reddit comment on freelancer vs business owner

Freelancers can also start a freelance agency. They do this by creating a makeshift agency to connect clients and independent contractors. The first method is to subcontract freelancers to do specific tasks for you. Most individuals pay a lower rate than what they make. The second method is to register on online freelancing platforms. An Upwork agency is a popular option for this. You can form a group of freelancers with different skill sets to provide complete services. Freelance agencies on Upwork take on complex tasks that require more than one person.

Upwork agency

Is There a Future for Freelance Digital Marketing?

Yes, there is a future for freelance digital marketing. A Fiverr Pro survey reveals that 54% of marketing leaders are hiring freelancers for digital marketing roles. You can earn around $51,785 yearly, as per Glassdoor. This translates to a 10% to 20% in profit margins per project. You can succeed as a freelance digital marketer, given you have:

  • high-value, long-term clients.
  • in-demand digital marketing skills.
  • in-depth market, product, or service knowledge.
  • a good pricing strategy.

Freelancer vs Agency: Why Local Lead Generation is Better

Freelancing or running an agency is profitable. But, local lead generation offers a more lucrative and sustainable source of income. Freelancers have limitations on the clients they take. They compete with freelance workers globally. That's why they have inconsistent income. Likewise, agencies have lower profit margins because of ongoing operational costs. Scaling the business requires complex planning and market research.

Local lead generation has fewer competitors because of localized service niches. You don't compete with long-standing global companies. This business model offers 80% to 95% profit margins because of its low maintenance. All you need is to identify in-demand local niches and create a website for each one. Then, you rank these sites organically on search engines like Google. When your microsites rank on the top of the SERPs, you generate high-value leads that are ready to buy. Forward these leads to local businesses individually or through website rentals.

conclusion lead gen maps

I've been doing this process for over 10 years, so I can guarantee its feasibility. Local leads are in high demand because of their conversion potential. I've been making over $50K in monthly passive income since 2014. Each local lead gen site offers $500 to $2,000. Unlike freelancing and running an agency, you don't deal with project management issues and have no cap on revenue.

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$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2025, is to build your own lead generation business.

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