6 Hidden Costs of Hiring Freelancers and How to Budget Properly

Hiring freelancers can be a smart and cost-effective solution for getting work done. 

If you approach it with the right strategy. 

While you may budget for an hourly rate or a project fee, there are hidden costs that can sneak up on you. 

Many businesses have trouble with unexpected costs or budget overruns when working with freelancers. But this doesn’t have to happen for you. With careful planning, you can manage these costs and create long-term, productive relationships with freelancers that benefit both sides.

Let’s take a closer look at six hidden costs of hiring freelancers. We’ll also discuss how to hire freelancers while staying within budget!

But first …

Why hire freelancers? 

Freelancers fill critical skill gaps and have expertise that you might not have in-house. They give you the flexibility to scale your team based on project needs so you can tackle large, complex tasks (or meet tight deadlines) without hiring full-time employees.

But the best independent contractors do more than execute. They also help you grow your business. 

They bring fresh perspectives, offer innovative solutions, and help you push past your current limits. With their help, you can take on bigger projects, scale your sales and content goals, and grow faster.

(All while keeping your internal team focused on core business goals.)

6 hidden costs of hiring freelancers to consider when hiring

While freelancers offer flexibility and expertise, you need to consider overlooked costs that can impact your budget and project timelines. Understanding these hidden expenses upfront helps you plan and avoid unexpected setbacks.

Here’s what to watch out for:

1. Time and effort in vetting and onboarding

Finding the right freelancer isn’t as simple as picking the first available candidate. 

Reviewing portfolios, conducting interviews, and testing skills all take time. This indirect cost adds up. 

A mis-hire can: 

• Require extra onboarding efforts
• Set your project timeline back
• Lead to a project restart

And if you rely on freelancers frequently, the repetitive learning curve for each new hire can further compound this expense. 

2. Communication gaps and management overhead

Freelancers work independently. (Which means they may not always align with your company’s workflow or expectations.)

Time zone differences and asynchronous communication can also delay responses and revisions, which slows progress. Managing freelancers may also mean you need additional oversight. In this case, you might need to overlook the project, hire a project manager to keep work on track. Or use your in-house account managers for support.

3. Scope creep and unplanned revisions

Freelance agreements rarely cover every possible detail. 

So, scope creep is a common issue. 

Small changes can accumulate and inflate costs beyond the original budget. Many freelancers also charge extra for revisions beyond a set number. And if deliverables aren’t clearly defined upfront … you may face costly rework so the final output lines up with your expectations.

(More on this in a bit.)

4. Integration with internal teams

Bringing a freelancer into your workflow isn’t always seamless. They may need access to internal tools like Slack, Asana, or CRM systems, which could require additional software licenses and platform fees. 

You may also need to provide training or documentation — which diverts time away from their core tasks. 

Collaboration tools with per-user pricing can further increase costs when multiple freelancers are involved.

5. Quality control

Not all freelancers deliver high-quality work. 

If output falls short, you may have to pay for corrections or even hire another freelancer to redo the work. Subpar results can also force internal employees to step in, which pulls them away from their primary responsibilities.

6. Limited availability and reliability

Freelancers typically juggle multiple clients, which can lead to inconsistent availability. If they disappear mid-project or suddenly become unresponsive, finding a replacement can be costly and time-consuming. 

In worst-case scenarios, you may have to start the project over. This can cause delays and additional expenses.

How to hire freelancers and stay within budget

Here’s how to budget properly when hiring freelancers:

Define scope and deliverables clearly

Unclear project details lead to scope creep, which quickly drives up costs. Be sure to set clear expectations in a detailed contract.

In your contract, outline:

• Project revision limits
• Deliverables in detail
• Price per deliverable
• Payment schedules
• Milestone goals

Structured documentation also helps minimize training time and reduce onboarding expenses.

Account for hidden costs in your budget

Freelancer costs can go beyond their hourly or project rate. Factor in the time spent on hiring, onboarding, and project management. 

Be sure to also build in a buffer (typically 10-25%) for unexpected edits, additional work, or adjustments that may come up during the project. Especially if projects take longer or need extra revisions.

Managing payments for multiple freelancers can get complicated. If you’re juggling too many outgoing payments in your business, a debt consolidation loan calculator can help you evaluate ways to simplify your financial obligations. 

(Use it to decide if you should consolidate some of your loan payments. It’s a great way to streamline your overall expenses and better manage cash flow across your projects.)

Standardize your freelancer hiring process

A repeatable hiring system saves you time and money. 

Develop a structured vetting, onboarding, and management process to streamline freelancer engagements. Start with trial projects before committing to long-term work. And keep a larger pool of pre-vetted freelancers to fill urgent needs without delays. 

Most importantly, make sure your freelancers complete at least a basic-level training and onboarding process. Consider using compliance training software to train your contractors on essential topics like data security, workplace ethics, and legal requirements.

Dedicated account managers can also help you streamline this process! 

Just give them your training requirements and onboarding procedures and they’ll take it from there. (Including assigning freelancers their first projects.) 

Invest in project management tools

Use tools like Trello, Asana, or ClickUp to keep tasks, deadlines, and feedback organized.

You’ll also need to consider more job-specific tools. For instance, content writers may need access to a grammar checker and SEO software. And graphic designers might need access to paid stock images or Adobe products. 

Structured communication helps minimize revisions, reduces back-and-forth, and helps freelancers stay on track. 

Which saves you time and money.

Plan for long-term sustainability

Building relationships with reliable freelancers can lead to better rates, faster turnaround times, and priority service. Do this by offering steady work and fair pay. 

Remember also to create internal process documentation. You need this to streamline your onboarding and screening process. (And to standardize routine work processes so projects stay within scope.)

*Pro-Tip: To keep your finances organized and protect your business long-term, consider setting up an LLC. Doing so can help you separate personal and business expenses and liabilities. This can make it easier to manage freelancer contracts, payments, and any potential legal risks.

Remember that cheap isn’t always cost-effective

A low freelancer rate might seem like a win. But if the work isn’t up to your standards, you’ll end up paying more for revisions and fixes — or even hiring someone else to redo the job. 

Instead of focusing solely on price, consider the long-term value a freelancer brings.

Freelancers who charge rock-bottom rates often cut corners, lack experience, or take on too many clients at once. The best hires sit in the “sweet spot.” They’re not overpriced. But they’re not working for pennies, either. 

A great way to gauge fit is by trialing a freelancer for 90 days. 

If they consistently deliver quality work, meet deadlines, and integrate well with your team during this time, they’re worth the investment. 

Wrap up 

Freelancers can bring expertise and flexibility to your business. But hiring them comes with hidden costs. Vetting, onboarding, communication gaps, and scope creep can all add up if you’re not prepared. 

The key to staying on budget is setting clear expectations, factoring in indirect costs, and using structured processes to streamline hiring and management. Investing in project management tools and forming long-term relationships with reliable freelancers can also save you time and money in the long run.

Most importantly, don’t fall for the cheapest option. Focus on freelancers who offer real value. A trial period can help you find the best fit before committing long-term.

PS: Looking for high-quality freelancers who deliver results? Find top talent on Twine.net. Create your job posting with Twine now. 

To your success!

FAQs 

1. How do I find and hire freelancers?

Use platforms like Twine and LinkedIn to connect with talented freelancers. Post a detailed job description and thoroughly vet potential candidates based on their portfolios and reviews. Take your time to make sure they align with your project needs.

2. What should I include in a job description for freelancers?

Outline the project scope, required skills, and deadlines in your job description for freelancers. Be clear about deliverables and expectations to attract the right candidates and avoid confusion.

3. How can I assess a freelancer’s suitability for my project?

Review a portfolio and past work to gauge a freelancer’s expertise. You should also conduct an interview to discuss your project and their experience.

Offering a small paid trial can also help you assess their skills and reliability firsthand. (At the very least, start with a quick test project so you can see their skills in action.)

4. What are the best practices for onboarding freelancers?

Provide a clear overview of the project, tools, and necessary resources when onboarding freelancers. Set up regular check-ins and establish communication channels to keep each project on track.

5. How do I ensure the quality of work delivered by freelancers?

Set clear milestones and timelines to track progress by freelancers. Provide constructive feedback early on so freelancers stay aligned with your expectations.

6. What payment methods are commonly used for freelancers?

Freelancers are typically paid per project, per hour, or per milestone, depending on the agreement. Writers usually charge per word. 

Always establish payment terms upfront to avoid confusion.

7. How can I protect my business when hiring freelancers?

Use contracts that define the scope of work, deadlines, and payment terms. Include clauses for confidentiality and intellectual property rights to protect your business interests. You’ll likely need an NDA (non-disclosure agreement) and a Scope of Work agreement for each contractor.