November 17, 2021

Freelancing Vs Full Time job - Which Should You Choose?

I don't want to talk about the obvious things you already know. We're not going to talk about location, freedom, being in full control of your income. These things are all pretty obvious. So I thought I would cover some of the things you maybe haven't thought of when it comes to choosing between freelancing & full-time.

I'm a bit biased because I left full-time for freelancing a couple years ago. But I will really try to be as balanced as possible here, and after going over the pros and cons we will talk about a couple frameworks for choosing which one is right for you, and a few different creative ways you can actually weave the two together for your career.

Pros of freelancing

Let's get into the pros of freelancing. Why could it be something you'd want to do over full time?

It's not just that you can make more freelancing, it's that, by definition, you must make less in a full-time role.

Let me explain that. You are only profitable as an employee if you're costing the company less than you're either making it or saving it. So the employer is kind of like the middleman, taking their cut between you and the market. Except that cut is usually, in the case of a healthy margin, going to be more than half, because they have all these fixed expenses and other things. You're likely only one expense of many.

However, if you're freelancing, margins can be as much as 90% or more, meaning you have very few expenses.

So you're able to capture all that value and it's going directly to you. Just a quick example, if you work for a development agency and the company gets a job for $5000, you'll be lucky if you're getting a cut of that $5000 at all. It's more likely that you'll be on a salary, and that's going to be considerably less than the value of all the deals that the company creates.

The next pro of freelancing, and this is probably the biggest in my mind, is you develop all these lateral skills like communication, sales, and marketing. These are super valuable, even if you want to apply for a full-time job, because that is something you need to market yourself for. You just create more opportunities for yourself in life when you understand these skills. I don't think it's any secret that knowing these skills is extremely valuable. You get a chance to develop them and, in fact, you have to develop them to be a successful freelancer. But that's not actually a pro for everyone.

The next benefit is that you can not only get and work with the clients you want, but also fire the clients you don't want.

Of course, you don't want to be doing this constantly and directly, but there are ways you can fire your clients indirectly, like saying your rate is going up. And that could be legitimately true. If they're not into it, then great, you don't have to work with them. And if they are, then you've made it worth your time.

So you have control of the people you interact with on a daily basis, that's just never a choice you have as an employee.

The next pro is that you can scale your freelancing into a business. In fact, freelancing is a business from day one. You can scale it directly by hiring additional employees and subcontractors, offering a wider array of services, or taking the skills you learned and building a lateral business based on the problems you discovered by freelancing with your target clients.

This also means that from day one you can deduct your expenses. If you buy something like a laptop, you can subtract that as a line item and actually not pay taxes on it because it's a pre-tax expense.

Full-time Job

A full-time job is a decent choice if you have a certain set of priorities.

The first pro of full-time is you can focus specifically on the technical skills for your job.

If you're in more of a technical role that means you don't have to do sales or marketing, or interact often with clients. You're able to develop a narrow focus. Even if you're doing this narrow focus for a limited period of time, you're able to acquire technical skills really fast. Faster than you would otherwise.

Now I think this technical focus is great, but you just want to make sure you're not making this choice based on limiting beliefs. So you could think you're not a natural fit for sales and marketing. But I think it's something most people can learn, or at least get better at over time. You just want to make sure you're making this decision for the right reason.

That narrow focus is particularly powerful when you couple it with the next point, which is that you're getting paid for professional training and learning when you're on a full-time job.

I always use the software developer examples because I am one myself. If you go into a company for six months as a junior developer, if you're fortunate enough to land one of those roles, then you're basically going to have people you can ask questions at any time of the day, in person. They're going to be ramping you up, and you're all going to be getting paid for that.

They'll be getting paid to train you and you'll be getting paid to learn.

So there's no question that you're going to become a better developer by having in-person mentors that you can ask questions at any time of the day, while concurrently working on these real company projects.

Next, when you have a full-time job, you can be 100% off the clock. What that means is that when the workday ends, you don't have to keep thinking about work. In a lot of cases our brains keeps thinking about the job when we go home. But at least, in theory, this is true.

As a freelancer, money never really sleeps. Without self control over mood and though patters, it can actually be a bit stressful thinking about work all the time. Whether it's pushing to make more money or worrying about not making enough money, there's a whole different set of problems to think about when freelancing that you do not have to be worry about when you can be off the clock.

The final pro, and the obvious one, is stability, specifically, stable income. If you have financial obligations and so forth then this is hugely important. A big part of that that people don't often think about is the benefits. Especially if you have a family in the U.S, you have to pay for health insurance. This is a huge monthly expense that you'll have to pay on your own if you don't have an employer. That is just one thing to be cognizant of, and it's a pretty big overhead. You don't have to worry about it if you work in a full-time position.

A framework for choosing: weighing your options between the two

You want to learn a new skill but you're not sure if you want to go the full-time or the freelance route.

We’ll just run through a set of questions, one of these might sound like your personal situation.

Question 1: Would you like to be an entrepreneur, or self-employed, in the future?

If that answer is a yes for you, then freelancing is going to help you acquire those skills. It may lead directly into you having a business with that natural transition we talked about: scaling with additional people as soon as you have the bandwidth to do so. Even if you don't go on to freelance in your niche, those meta-skills, the marketing, sales, customer service, delivery, and interpersonal skills, are all going to benefit you in your future self-employed career.

Question 2: Are you leaning toward full-time work due to fear of putting yourself out there and interacting with people, especially clients?

If you were disillusioned from a terrible customer service job in the past, or you think you're too introverted to freelance, that's different than genuinely knowing you just want to focus on code. I know people are going to say you still need communication skills to work on a team and that's true. But team communication skills are different than the levels you need to go to freelance, for example, sending follow-ups communicating fast enough to delight customers and convincing people to work with you in the first place. But these skills can be learned, so make sure you're making the right choice out of genuine interest, and not fears that can be overcome.

Question 3: Do you have financial obligations?

Student loans, insurance, cost of living. What do those look like for you?

If it's a prohibitive level, you might want to look at starting to freelance on the side while you still have another job.

Of course it's going to take longer, but you can't really do anything about it.

Or, if you have the ability, you can do what I did— move to a lower cost of living country. Personally, I moved to eastern Europe. There’s plenty of places you can go. A lot of people go to Thailand. I don’t think I could be so productive there. A lot of people go to Latin America, Mexico, Colombia, these types of places. I personally went to Eastern Europe because, for me, that had the best trade-off between quality of life and cost.

Final Question: Are you unsure of how to break into a full-time role?

If you're certain you want to work in a full-time position, but you're unsure of how to break into that role, you can freelance to gain technical knowledge and experience. This may sound counterintuitive but you can start on the simplest jobs. There are simpler, more beginner ones than you probably realize.

By starting with simple freelancing, you can build up a resume of real-world projects and references you can send to your employer.

You will make yourself an actual developer who's worked with real clients and created some value for businesses; you're effectively separating yourself from people with legitimately no experience. This is what prospective employers want to see. This is part of the model we teach in Freemote freelance developer bootcamp.

You can check out the link below if you do want to become a freelance developer.

So with that said, I hope these pros and cons helped you clarify your thoughts on freelancing and full-time.