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).

B2B, which stands for business-to-business, is a process for selling products or services to other businesses. On the other hand, a B2C sells directly to its consumers.

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.

One example to set up goals is the SMART framework.

A SMART goal is any goal with a carefully planned, concise, and trackable objective. To be such a goal needs to be specific, measurable, achievable, relevant, and time-based. Bringing structure and trackability to goal setting increases the chances goals will be achieved, and it helps align the organization around those 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.

Or use techniques like Pomodoro techniques.

The Pomodoro Technique was created by Italian business consultant Francesco Cirillo in the late 1980s. The Pomodoro Technique is a time management system where work is performed in 25-minute intervals.

Professional goals are mostly related to income, which defines what 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.

Freelancer vs. Solopreneur

Being a freelancer is a first step toward moving away from the 9 to 5 lifestyle, which is unsuitable for many.

And while freelancing is sustainable for a lot of people, for others, that is the first step toward becoming an entrepreneur.

But isn’t a freelancer an entrepreneur?

Well, not necessarily. Indeed, to jump from freelancer to solopreneur, you need to go through a few paradigm shifts.

A solopreneur is usually (not always) a digital entrepreneur who leverages automation, work flexibility, and creativity to develop ultra-lean business models. Those can scale over the one-million-dollar revenue mark with a minimum business overhead, no venture capital funds, and mostly bootstrapped. Those solopreneurs start by mastering profitable microniches.

Such as:

Paradigm Shift N. 1: From hourly rate to outcome and asset building

Primarily working for the outcome, not for an hourly rate.

This is one of the most crucial premises.

As the freelancer does learn to work in a different way than the nine-to-five job, thus earning much more by working fewer hours.

Yet, the compensation is still mostly hourly based.

Thus, even as a freelancer, you might get a high hourly rate that is still based on how much time you can devote to a project.

To move from freelancer to solopreneur, the first step is to move away from the hourly rate logic.

Indeed as a solopreneur, you learn to build assets for your business, which while generating much less income in the short term, might make you way more money in the long run.

For instance, if you take the example of a blogger.

The difference between freelancers and solopreneurs is the former will write for others and get paid well for it.

The latter will write for her/himself and build a critical mass of blog posts, thus not earning compensation for the single blog post but by building a business on top of these blog posts.

Paradigm Shift N. 2: Coordinate vs. do it all yourself

To build a business rather than a profession, you need to understand that after a certain threshold, you will need the help of others.

Thus, you will learn to coordinate these people to achieve a much more scalable outcome.

Indeed, as a freelancer, most of the time, you might be working on yourself, and doing most of the tasks needed to complete the project.

Yet, when you shift from there, how can I make this project much faster to achieve and much more scalable to produce?

You move toward the ability to coordinate with others.

Paradigm Shift N. 3: Fixed vs. Scalable business

Connected to the above.

The freelancer might offer her/his services, and yet those might not scale well, as there is only a certain amount of given time the freelancer has in the day.

When the freelancer moves the logic away from time scarcity to time abundance (for instance, by coordinating other freelancers or by, let’s say, transforming a service-based business into a product like a course or a book) and scalability, that is a turning point from moving from being a freelancer to solopreneur.

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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