Am I Ripping Off My Freelancers?

Growing from solo freelancer to agency owner is an exciting milestone. You’ve made those first crucial hires, built a small team, and now you’re taking on bigger projects. But with team members comes a new challenge that keeps many agency founders up at night: how do you price your services to cover team costs while remaining competitive in the market?

This balancing act feels impossible some days. Price too high and you’ll lose clients to competitors. Price too low and you can’t afford to pay your team what they deserve—or worse, you can’t pay yourself. The tension between these two forces creates what Christine Olivas calls a “two-sided marketplace” problem, where you’re constantly trying to keep both clients and team members satisfied.

Understanding the Two-Sided Marketplace Challenge

If you’re running a business that connects talent with clients—whether that’s embedding teams within agencies or providing specialized services to brands—you’re operating a two-sided marketplace. And as Christine points out, even the largest platforms like Airbnb and Uber constantly struggle with this dynamic.

On one side, you have clients saying they can only afford a certain rate. On the other side, you have talented team members who know their market value and expect competitive compensation. You’re stuck in the middle, trying to make the math work while still running a profitable business.

This challenge becomes even more acute when you’re working with other service providers rather than direct-to-brand. Agencies and consultancies operate on their own tight margins and face market pressures that limit what they can charge their clients. Those limitations get passed down to you as their vendor.

The good news? This problem is solvable, but it requires strategic thinking about who you serve, how you position your value, and what you’re willing to walk away from.

Not All Clients Are Created Equal

Here’s a truth that took Christine years to fully embrace: you don’t need to serve every potential client in your market. In fact, trying to do so will likely keep you stuck in a cycle of underpricing and undervaluing your services.

With over 10,000 agencies in North America alone, Christine’s company has worked with only about 60. That’s barely scratching the surface of the total addressable market. But here’s the key insight: some of those agencies simply don’t charge their own clients enough to afford premium services. And that’s okay.

When an agency says they can only pay a rate that won’t even cover your team’s compensation, the answer isn’t to squeeze your margins or underpay your people. The answer is to politely recognize there’s no mutual fit and move on. This requires confidence and discipline, especially when you’re still growing.

The agencies that become great long-term clients are the ones who are proactive and thoughtful about their pricing. They understand the value of bringing in specialized expertise. They build premium services into their scopes from the beginning, often adding margin on top so everyone can profit while delivering better work.

These clients exist, but you have to be willing to say no to the wrong-fit clients to find them.

Compete in the Right League

Think about the word “competitive” for a moment. Being competitive in high school sports looks very different from being competitive at the college level, which looks nothing like being competitive professionally. The same principle applies to your agency.

Before you can determine whether your pricing is competitive, you need to understand what league you’re playing in. Are you delivering entry-level results or are you bringing premium expertise and strategic thinking? Are your processes polished and professional, or are they still a work in progress?

If you’re finding that you need to charge more to cover your team costs but clients won’t pay those rates, you might need to level up your service delivery first. This doesn’t mean you’re doing bad work—it means you need to assess honestly where you are and where you need to go.

Premium clients who can afford higher rates expect premium results. They expect teams that have refined processes, deep expertise, and the ability to deliver consistently excellent work. If you’re still developing those capabilities, you may need to build them while working with clients at your current level, then graduate to the next tier.

Articulate Value Beyond Deliverables

Most freelancers and small agencies describe their services in terms of deliverables: “We write social media strategies” or “We manage marketing campaigns.” But that’s not where the real value lies.

When you’re pitching to clients, especially at premium price points, you need to articulate the deeper value you provide. What problems do you solve? What risks do you eliminate? What time do you save?

For Christine’s business, the deliverable might be a strategist or social media manager embedded on a project. But the real value is that agencies don’t have to spend time (which has become nearly a full-time job for many) sourcing, vetting, and managing freelance talent. They don’t have to worry about quality control or whether someone will suddenly become unavailable mid-project. They don’t have to create a toxic hiring-and-firing culture by bringing on full-time staff for project-based work.

That’s the value proposition: you’re the “easy button” for great outside talent.

What’s your easy button? Maybe you bring together multiple experts who each contribute their specialized knowledge, creating a marketing strategy that’s informed by cutting-edge thinking across disciplines. Maybe you eliminate the risk of working with an untested freelancer by providing a vetted team with proven results. Maybe you save weeks of onboarding time because your team already works seamlessly together.

Whatever it is, articulate it clearly. Premium pricing requires premium positioning, and premium positioning requires articulating value that goes far beyond just describing what you deliver.

Build Relationships That Support Higher Pricing

At a certain price point, transactions become relationships. You can’t just have a “buy now” button on your website and expect to charge enough to pay your team well. Higher-ticket services require personalized sales conversations, relationship building, and often collaborative scoping with your clients.

This is especially true when working with agencies or other service providers. Christine has found success in having frank conversations with agency clients about how to make the math work for both sides. Sometimes that means creating quick financial models showing how much the agency saves versus hiring full-time employees. Other times it means collaborating on how they can build your services into their client proposals with appropriate markup.

These aren’t uncomfortable conversations once you’ve built trust. In fact, premium clients will often ask you to help them justify your cost internally. They want to work with you—they just need the business case to make sense.

The key is being willing to have these conversations openly and frequently. Don’t just send over a rate card and hope for the best. Engage in genuine partnership to figure out how everyone can win.

Be Transparent With Your Team

Here’s an uncomfortable truth: if you’re taking a margin on your team members’ work (which you should be, because you’re providing value by finding and managing the client relationship), they will likely earn slightly less working with you than they could earn freelancing independently.

Many new agency owners struggle with guilt about this. But remember, you’re providing real value to your team members as well. You’re handling business development, client management, contracting, invoicing, and project coordination. You’re potentially providing them access to better clients and more interesting projects than they could find on their own. You’re creating collaboration opportunities with other talented professionals.

Be upfront about this trade-off during onboarding. Christine tells her team members clearly: your rates will be lower than what you might get on the free market, but here’s everything we provide in return. There are plenty of talented people who love doing great work but don’t enjoy the business side of freelancing. For them, that trade-off is absolutely worth it.

This transparency helps set proper expectations and attracts the right people to your team—those who value stability, collaboration, and the ability to focus on their craft over maximizing every dollar.

Understand Industry and Seasonal Dynamics

Pricing isn’t static, and neither is your market. Different industries have different budget cycles and constraints. Retail clients may have flush marketing budgets at certain times of year and tight budgets at others. Tech startups might suddenly have funding to spend after a round closes. Enterprise clients often need to spend down budgets before year-end.

Understanding these patterns allows you to time your pitches strategically and adjust your positioning accordingly. It also helps you understand when a “no” is really about timing rather than about your value or pricing.

Similarly, understand that working with brands directly often provides more pricing flexibility than working with agencies. Brands can justify premium costs more easily, especially during strong revenue periods. Agencies are always managing their own margins and face more market pressure on pricing.

Neither client type is better or worse—they’re just different. But understanding these dynamics helps you set realistic expectations and target the right opportunities at the right times.

When the Math Doesn’t Work, Walk Away

Perhaps the most important lesson is knowing when to walk away. Not every opportunity is worth taking, especially if it requires you to underpay your team or work for rates that make the business unsustainable.

This requires discipline and confidence, particularly when you’re still growing and every opportunity feels precious. But taking on wrong-fit clients at unsustainable rates creates a vicious cycle. You can’t deliver your best work when you’re stressed about making the numbers work. Your team becomes demoralized if they feel undercompensated. And you certainly can’t build the kind of premium reputation that attracts better clients in the future.

Sometimes the best business decision is to politely decline and wait for the right opportunity. Those premium clients who understand your value and can afford your rates do exist. But you won’t find them if you’re too busy serving clients who fundamentally can’t afford what you offer.

Making It All Work Together

Pricing your agency to cover team costs while staying competitive isn’t about finding a magic number. It’s about making strategic decisions across multiple dimensions: who you serve, how you position your value, what league you compete in, and what you’re willing to walk away from.

Focus on finding and serving clients who are proactive, thoughtful about pricing, and value premium work. Be clear about the unique value you provide beyond just deliverables. Build genuine relationships that support collaborative problem-solving around pricing and scope. And be transparent with your team about the trade-offs involved.

Most importantly, remember that “competitive” is relative. You don’t need to compete with every agency or freelancer in your space. You just need to compete effectively for the clients who value what you uniquely provide and can afford to pay for it properly.

The math can work. It just requires being strategic about who you serve and confident about the value you provide.