Despite not needing to add more employees, an agency I deal with experienced a significant increase in revenue with little profit improvement. They used freelancers instead.
This happens more often than you might think. The issue is how you pay and bill freelancers. They are surrogate staff. You must get a reasonable return on their work.
You should determine what billing rate you would use if the freelancer were an employee and pay that person one-third to one-half of that rate. If you would bill them at $150 per hour, you should pay them between $50 and $75 per hour.
– Darryl Salerno, Owner, Second Quadrant Solutions and Strategic Management Consultant