What Is The Freelance Business Model?Freelance Business Model In A Nutshell

The freelance business model is a B2B model where the freelancer sells their own services to other businesses. Under the freelance business model, a freelancer sells their own services to other businesses. 

Understanding the freelance business model

While there is some conjecture around the precise definition of a freelancer, it is important to note that someone who sells their services to consumers is considered an entrepreneur. More to the point, the business model an entrepreneur utilizes is business-to-consumer (B2C).

The freelance business model is here to stay. According to a report released by business management platform Spera, more than 33% of the 54 million workers in the United States identify as a freelancer.

Developing a freelance business model

In this section, we’ll take a look at a general approach to developing a freelance business model:

What does being a freelancer entail?

The freelance industry is romanticized unlike any other. Those who are outside the industry assume the freelancer enjoys an idyllic existence where they live on a tropical beach in Thailand free from the overbearing presence of a boss.

However, the role of a freelancer can be stressful. The individual must be able to advertise and market themselves in addition to delivering quality work. They must also manage their workload effectively and wear different hats for different clients.

Many freelancers post adverts on designated platforms or are contacted by clients directly. Designated platforms act as mediators and ensure both parties are satisfied. In the case of direct communication, a contract outlining the scope of the work and fair compensation is vital. These contracts can also describe confidentiality or non-compete clauses.

Discovering a niche

There are countless niches to be targeted in a freelance business model, including marketing, translating, videography, voiceovers, writing, graphic design, bookkeeping, and data entry to name just a few. 

Freelancers should focus on one skill at first. However, since most niches are quite competitive, it can also be effective to combine two or more skills and develop a robust unique value proposition. For example, a freelance writer with a background in law may specialize in editing or writing complex legal documents.

Goal-setting and work-life balance

Once a suitable niche has been identified, it is important to set a few personal and professional goals. Personal goals help with achieving an optimum work-life balance, which can be problematic for some freelancers. One individual may commit to taking a five-minute rest for every 60 minutes of work, for instance.

Professional goals are mostly related to income which in turn defines what price a freelancer can charge and how many hours they need to work to earn a living. Pricing is a much-debated but critical component of the freelance business model. A base price can be established by looking at what other freelancers charge for similar services. Furthermore, a freelancer should never undercut the value of their time or their work just to land the contract.

Building a solid customer base

For the freelancer, building a solid customer base means first doing some due diligence on the client beforehand. How have they been received by other freelancers? Were they exposed as rude, unrealistic, or demanding? Then, it is important to market one’s services via email, networking, social media, content, or any other traditional form of promotion.

It is also imperative that the freelancer becomes comfortable with rejection. The self-promotion that comes from pitching work to clients may take a while to get used to it, but those that do tend to develop a competitive edge. 

Freelancers should strive to build a customer base of satisfied clients who are more likely to make repeat purchases and leave constructive yet positive reviews. This can reduce some of the income insecurity inherent to the freelance business model.

Key takeaways:

  • Under the freelance business model, a freelancer sells their own services to other businesses. Note that an individual who sells products and services to consumers is technically considered to be an entrepreneur
  • The freelance business model is romanticized to some extent. However, freelancers must be multi-skilled, resilient, and be comfortable with rejection, uncertainty, and a lack of income security.
  • The freelance business model involves discovering a niche and combining skills to develop a unique value proposition. It is also important to build a solid customer base of repeat buyers and be able to set a price that properly values the services rendered.

Connected Business Concepts

Marketplace Business Models

marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Food-Delivery Business Models

In the food delivery business model companies leverage technology to build platforms that enable users to have the food delivered at home. This business model usually is set up as a platform and multi-sided marketplace, where the food delivery company makes money by charging commissions to the restaurant and to the customer.

Wholesale Business Model

The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.


A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

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