When to Hire a Freelancer vs an Agency vs Build a Team

Every founder building a software product hits this question: who do I hire to build it? The three options — freelancer, agency, or in-house team — each have vocal advocates. Usually people who've only experienced one model telling you it's the best.

I've experienced all three. I've been the freelancer building MVPs for founders. I've been the white-label developer inside agencies for over a decade. And I've worked embedded in teams as effectively a full-time developer. So let me give you the honest breakdown.

Option 1: Freelancer

What you get: One person who handles everything. Architecture, backend, frontend, deployment. Direct communication, no middle layers. They work with you, not for a company that assigned them to you.

What it costs: For a senior freelancer in the UK, expect £400-800/day or £15-50k for a complete MVP project. Cheaper than an agency, more expensive than you think junior freelancers should cost (but junior freelancers on an MVP is a false economy — more on that in a minute).

Where it works:

Freelancers are ideal for MVPs and early-stage products. You need someone who can make decisions, work across the full stack, and ship fast. There's no project manager scheduling meetings about meetings. You talk directly to the person writing the code.

When I built TidyLinker, Adele and I communicated directly. I demoed progress in fortnightly calls. She had my phone number. When she had a question, she asked me. When I needed a business decision, I asked her. No tickets, no project managers, no communication overhead. We went from concept to live marketplace in four months.

The same with DevTrends — Emma and I worked directly together, idea to production in 10 days. That speed is only possible with direct communication and a developer who can make technical decisions autonomously.

Where it fails:

The single point of failure problem is real. If your freelancer gets sick, takes a holiday, or takes on another project, your development stops. There's no team to absorb the impact.

The bus factor is also real. If your freelancer disappears (it happens, more often than you'd think), you need to find someone else, get them up to speed, and continue from where the last person left off. This is why I always insist on code living in the client's repository with clean documentation.

Freelancers also have capacity limits. One person can only do so much. If your product grows to the point where you need frontend, backend, DevOps, and design happening simultaneously, one freelancer becomes a bottleneck.

Red flags when hiring freelancers:

• Won't give you code access
• No portfolio or references
• Says yes to everything without questions
• Quotes significantly below market rate (you'll pay the difference in quality)
• Can't explain their process

Option 2: Agency

What you get: A team. Project manager, designer, one or more developers, QA testing. Managed process with regular status updates. Someone else handles the coordination.

What it costs: £50-150k for an MVP. Agencies have overhead — offices, project managers, sales teams, account managers — and that overhead is baked into your quote. You're paying for the machine, not just the code.

Where it works:

Agencies work well when you want to be relatively hands-off. You describe what you want, they plan the project, manage the team, and deliver. If you're a non-technical founder who doesn't want to manage a developer directly, this removes burden from you.

They also work for larger projects that genuinely need multiple specialists. If you need custom branding, UX research, frontend development, backend development, and DevOps — all at the same time — an agency can resource that. A single freelancer can't.

Agencies are also good for established companies adding a digital product. You've got budget, you need it done to a professional standard, and you want someone accountable. An agency gives you a contract, a project plan, and someone to blame if things go wrong.

Where it fails:

The person who sold you the project isn't the person building it. The smooth-talking account manager who understood your vision hands it off to a team who may or may not get it. The game of telephone between you, the project manager, and the developer introduces friction and misunderstanding.

I've been on the inside of this as a white-label developer for agencies for over 10 years. The model works when the agency is honest about who's doing the work and the PM actually adds value. It fails when the PM is just relaying messages between you and the developer, adding delay without adding insight.

Agencies are also slower than you'd expect. Decision-making has to go through processes. Changes need to be scoped, approved, and scheduled. The overhead that protects quality also slows velocity. For an MVP where speed and iteration are critical, this can be frustrating.

And the cost. I've seen agencies quote £80-100k for projects that I'd build for £25-35k as a freelancer. Some of that difference is legitimate — design work, QA, project management. Some of it is margin.

Red flags when hiring agencies:

• You never meet the actual developers
• The PM can't answer technical questions
• They won't share the team composition
• The quote is vague about what's included
• They push for big upfront commitments before discovery

Option 3: In-House Team

What you get: Dedicated people working on your product full-time. Deep context, growing expertise, aligned incentives. They know your product, your users, and your codebase intimately.

What it costs: A senior developer in the UK costs £60-90k/year in salary, plus 20-30% in benefits, equipment, management overhead. You need at minimum 2-3 people for a functional team: a senior developer, a mid-level developer, and probably a designer or product person. That's £150-250k/year in people costs before your product has earned a penny.

Where it works:

In-house teams are the best long-term option for a product that's growing and will need continuous development for years. The knowledge compounds. The team gets faster over time. They understand the product deeply enough to make good autonomous decisions.

If you've found product-market fit, you've got revenue, and you need to accelerate development — building a team is the right investment. The cost is higher than a freelancer, but the output scales better.

Where it fails:

Building a team is slow and expensive to start. Hiring a good senior developer takes 2-3 months. Getting them onboarded and productive takes another 1-2 months. Before your team is genuinely productive, you've spent 4-5 months and £50k+ in salary and recruitment costs without shipping features.

For an MVP? This is insane. You don't need a team to validate an idea. You need one good developer working fast.

The management overhead is also real. A team needs leadership, direction, process, and coordination. If you're a solo founder, managing a development team is a full-time job on top of everything else.

Red flags when building a team:

• Hiring before you've validated the product
• Hiring junior developers to save money (they need a senior to guide them — now you need more headcount)
• No technical leadership to evaluate candidates
• Trying to build a team and an MVP simultaneously

The Decision Framework

Start with a freelancer if:

• You're building an MVP or v1
• Budget is under £50k
• You need to move fast
• The project has a defined scope (even if it'll evolve)
• You want direct communication with the person writing code

Go with an agency if:

• Budget is £50k+
• You want to be hands-off
• You need multiple disciplines (design, development, strategy)
• You're an established company, not a scrappy startup
• You want contractual accountability

Build a team if:

• You've found product-market fit
• You have revenue or significant funding
• Development will be continuous for 12+ months
• You need multiple people working in parallel
• You have technical leadership (CTO, lead developer) to manage them

The Hybrid Approach

In practice, the best approach often combines models. Here's what I see work well:

Phase 1 (MVP): Senior freelancer. Build fast, validate, iterate. £20-40k, 3-4 months.

Phase 2 (Growth): Same freelancer for continued development, plus an agency for design work or a specific feature that needs specialists.

Phase 3 (Scale): Start building an in-house team. The freelancer helps onboard the first hire, transfers knowledge, and gradually steps back. Or stays on as fractional CTO while the team grows.

This is exactly the model I offer through my fractional CTO service. I'll build the MVP, iterate post-launch, and when the time is right, help hire and onboard an in-house team. The transition is gradual, not a cliff edge.

The One Thing That Matters More Than The Model

Regardless of which option you choose, one thing matters more than anything else: the quality of the individuals involved.

A brilliant freelancer will outperform a mediocre agency every time. A great agency team will outperform a poorly managed in-house team. The model is secondary to the people.

So whatever you choose, invest time in vetting. Ask for references. Look at previous work. Have a conversation and see if they ask smart questions about your business, not just nod along.

The most expensive option isn't the one with the highest day rate. It's the one that wastes your time building the wrong thing.

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I've been building web products for 16 years. If you're looking for a senior developer you can actually trust, get in touch.