Subcontracting
Paying someone outside the business to deliver work you are contracted for — capacity you can buy, with the risk still yours.
Subcontracting is paying an outside party to deliver work you have promised to a client. The client's agreement is with you; the subcontractor's is with you. Both sentences matter, because they mean the risk does not move even though the work does.
It is the fastest way to add capacity and the easiest to get wrong. The two failures are margin and control. Margin goes when the price you pay leaves no room for the management the work still needs — briefing, review, the fix when it comes back wrong. Twenty per cent is not a margin on subcontracted work, it is a fee for taking on someone else's risk. Control goes when the subcontractor's standard is assumed rather than specified, which is what written procedures exist for.
The legal edge to check once, properly: who owns what is produced. Ownership does not pass to you automatically in most arrangements, so you can be selling a client something you do not have the right to deliver. Terms and jurisdictions vary — this is a thing to have checked, not a thing to infer from a template.
Worked: a $5,000 project subcontracted at $3,000 looks like 40%. Add 6 hours of briefing and review at a $60 replacement cost and one round of rework at $400, and the real margin is $1,240 — 25%, which is a different decision.
Also known as
- outsourcing
- white-labelling
- freelance delivery
Relevant for
- Creators
- The editor's fee is not the cost — brief, review and rework are yours to carry, and they are what turns a 40% margin into 25%.
- Business owners
- The client's agreement is with you, so the risk never moves; specify the standard in writing and check who owns the output before the first invoice.