When you dig into the DNA of work, two models come out: contract vs freelance.
They are both escapes from the 9-to-5 white—and blue-collar jobs, but they are still unique. So, what do you prefer? Being your own boss or a working partner?
Freelance and contract work are two coexisting worlds, each with advantages and disadvantages. They also have a few similarities and differences, which we’ll highlight later.
But back to our debate: freelance vs contract!
Is there any superiority to the other, or are they on the same playing field?
Let’s explore that together.
Definition of Freelance Work
Before answering the question, “What is the difference between freelance and contract?” let’s start with introductions, beginning with freelancing fundamentals.
A freelancer is a solo rider. These individuals are self-employed and offer unique skills and services to clients. A freelancer works on a project-to-project basis, fully controlling their progress.
The duration of a freelancing job depends on the task. Some take a day or two, and others can run for months. For example, a social media content creator’s project might be a week or month-long one. A web developer might work until the website is complete, which might take months.
Once you become one, you can decide your workload, rates, and client acquisition techniques.
The common types of freelancer careers are
- Web developers and designers.
- Content creators like writers, bloggers, and social media creators.
- Digital marketers.
- Consultants, tutors, and coaches.
- Translators.
Definition of Contract Work
On the other side of the freelance vs contract work scale, the latter is working on a fixed-term agreement. A contractor is an independent individual working with a single client. One might sometimes have an agency representing them.
The agency’s role is to acquire clients and negotiate rates. The contractor only comes in after the agency and client have agreed. You might still be involved in the initial stages as a contractor, but you can also choose not to.
A contractor’s agreement with a client outlines the project’s scope, deliverables, and time frame. Contractors typically have flexible hours; however, they may have set times when they need to be on site.
Common contractor careers are:
- IT and software developers.
- Engineers and architects.
- Healthcare providers.
- Event planning and production.
- Project managers.
Key Differences Between Freelancing and Contracting
These two work models share many similarities. First, they are independent and autonomous careers. Both professionals can choose their clients, projects, and work arrangements. Second, they work per project, possess specialized skills, and enjoy flexible work arrangements.
Both freelancers and contractors also require impressive time, resources, and project management skills. Their common goal is to complete projects as efficiently as possible.
Despite these likes, they also differ in a few ways. Below are the main differences between freelance and contract:
Work arrangements
Freelancers work alone most of the time, while contractors collaborate with others. Contractors work with individuals, suppliers, and many more to complete jobs.
In these arrangements, a freelancer better controls the schedules and clients. Contractors sometimes have to deliver late due to unenforceable holdbacks that were out of their control. For example, a late flower delivery to an event might cause decoration timeline setbacks.
Client Number
This is the most noticeable difference between freelancers and contract workers. A freelancer could work with multiple clients and contractors, one at a time.
The reason is simple. Freelancers’ tasks are typically smaller. Contractors’ work usually includes bringing in materials or other professionals to complete the project. For this reason, they take more time to plan and execute. Having two demanding projects would be unwise.
Job Types
A freelancer can work on projects across multiple industries. For instance, a product branding photographer offers the same service to farmers, real estate agents, and educators. They can also provide the same service to law enforcers, government, and medical institutions.
A contractor is mainly limited to one field. An electronic engineer only works on electric-related works. Finding one working on a highway is atypical unless electricity is involved.
Payment Structures
Freelancers charge their services using different methods. They charge on hourly, daily, milestone, or retainer rates. Whatever you choose, project-based work vs hourly work is entirely up to you as the freelancer.
Contractors’ fees are usually fixed and set after the initial planning stages. After going over the quantifiables, a contractor gives their compensation estimate. They set that amount based on working hours and all logistical costs the contractor may incur. Expenses such as accommodation, fuel, wages, and travel are examples.
Legalization and Certification
Regarding tax payments and licensing, a freelancer’s obligations are usually one person’s. Most states allow freelancers to pay ordinary taxes. They might also not need licensing or certification unless the business is highly specialized. A freelancer only pays the set percentages and fees, nothing more.
Conversely, contractors must operate under stringent licensing and taxation obligations. For instance, an architect must have the educational and industry certifications to work. Their taxation and licensing also vary based on the project type and scope.
Pros and Cons of Freelancing
Freelancing has its fair share of pros and cons in the battle between freelance and contract employment. Let’s start with the pros:
Pros
- The working flexibility and autonomy are unmatched.
- You work with numerous multi-industry clients.
- You have a higher potential for earning more with experience.
Cons
- Inconsistent income.
- Taxes and licensing might be expensive.
- Administrative tasks might overwhelm you.
- Most projects lack benefits like insurance.
Pros and Cons of Contract Work
Before choosing a freelance or contract, studying the latter’s ups and downs is wise. Knowing both sides of the story helps you make the best decision. Here are the pros:
Pros
- Contract work is more stable during the contract period (which can last years.)
- Contract work outlines explicit project scopes and expectations.
- It offers potentially long-term relationships.
- It provides you with a secure financial income channel.
Cons
- It can be unstable after contracts end.
- Contractors have less control over work arrangements.
- Contractors may not have benefits.
- The acquisition of licensing and certificates may take time.
Choosing the Right Path for You
Question: What fits you best between freelance vs contract employment?
The answer hinges on preferences when it boils down to freelance vs contract vs self-employed.
These preferences may be based on a career path, income goals, working model, etc. If you need help to make that decision, here is a breakdown. Reading and internalizing this section might shed some light on what suits you:
Stability or Flexibility?
If your eventual life goal is flexibility, freelancing offers it best. Freelancers have better control over workload, project type, and scheduling than contractors.
A contractor might be bound to work on specific days or hours.
As a contractor, you might also work exclusively in one particular industry, such as construction. Such procedural outlines better structure a contractor’s career. A freelancer’s career is unstable because of the differing jobs, clients, and markets.
Remote or On-Site?
Due to the technological tools available, freelancers and contractors typically work remotely. Both professionals may use project, task, and client management tools online without having to show their faces. They might also use invoicing and payment platforms like Ruul to streamline their finances.
However, some contractors might be needed on-site most of the time. Event planners, engineers, and healthcare providers are among the on-site contract professionals. IT and software contractors might work part-time remotely but make site visits for installations, hardware fitting, and configurations.
Payment Security?
Both professions have concerns regarding payment security.
But freelancers get the short end of the stick on this one.
Freelancers face income fluctuations and some insecurity issues. Clients pay using differing models; some pay on time, while others pay late. In some unfortunate events, the client can disappear without completing payments! And sometimes, you can do nothing about it but move on.
Contractors have a better financial security net. Due to the complexity of most contractual projects, both parties sign legally binding documentation. This means the client must pay as per the agreement after the project is completed. These papers give contract work some security. Suppose a client forfeits payments; you have the contracts to present to the court as proof.
What Skills and Career Level Are You On?
Your skillset is another determinant of choosing freelance vs contract employment. Your experience level also helps specify your path.
Here is an example:
You may first go with on-site contract work if you’re an entry-level engineer in your 20s. Being on-site will give you better insights into what happens during a project. Then, perhaps in your 50s and 60s, you can start freelancing.
At this career stage, you have plenty of experience that will help you become a better freelancing consultant.
What’s Best: Freelance vs Independent Contractor?
It’s clear that both have lucrative benefits: one has job variety, and the other has better financial security! Their differences also include flexibility, stability, and remote and on-site work arrangements.
The best fit is a personal choice. You select the one that mostly resonates with your preferences. Thankfully, now you have contractual and freelancing fundamentals to make the best decision. You’re also in a better position to justify the answer to “How much does a freelancer make?” as well as their counterparts!
Whatever you decide on, remember always to deliver high-quality work. That way, you can build better client relationships and expand your career as a freelancer or contractor!
