Ask HN: Evolving from freelancing gigs to a consulting company?

First, you need the demand. Ideally where the demand for your type of services is above your current capacity to deliver. As in you're literally declining well-paying work with reputable clients because you simply don't have the time to build all the projects yourself.

Second, you need a supply of talent. A network of other developers who are dependable who you can call up on demand or hire outright.

If you lack either of these the agency is going to have a rough time, and probably going to fail.

Third, as an agency you will make money on the margins. Revenue will flow through your business and you will capture some percentage of it. This is very different from consulting where you capture almost 100% of the revenue, less some minor expenses.

The reason for this is simple: labor.

Let's say your rate is $100/hr. Since you're a consultant operating in a global free market that $100/hr is competitive within the market, and is mostly inelastic - there's not much room to go up or down. Another developer with your same skill level is going to cost $100/hr.

So where's you're margin? You can find margin by hiring a less-skilled developer at $75/hr. But then the quality suffers (and so can your reputation, reducing demand). Or you can attach a $25/hr "agency fee" to every hour worked. Or you can find a sucker who doesn't know the true value of his labor, and underpay and overwork him. (This last option is how most agencies operate).

Instead of making $100/hr consulting you're making $25/hr for each hour your sub-contracted developers work. This can work out nicely if you have a high level of demand, and if your developers are responsible self-starters who don't require a lot of management work on your part. But you would need some multiple of your current workload to earn the same amount of money.

My advice is to _not_ fold your current consulting into an agency. Instead, start an agency as a side-project, incorporated as a completely separate business. An agency needs to be marketed very differently than an individual consultant. Find other developers and marketing people you can partner with, agree on a compensation structure, and see if the company can land some big contracts. You can even sub-contract the project work to yourself individually at your normal labor rate.

It will be difficult to find partners who are comfortable with this. It's very difficult to work on a margin basis when your partner is working on a labor basis. But if you can earn $100/hr on the open market why would you work for your own company for less? This is one reason why many consultants end up making less money when they start an agency - they undervalue their labor because it's their company.

Please don't attribute anything untoward to me. Reputation is EVERYTHING in this industry. I would NOT suggest someone do something fraudulent, ever.

When you hire $PLUMBING_COMPANY to come fix a leak at your house, you don't care WHO does the work. You want your problem FIXED. YESTERDAY.

So... is it fraud if they send someone who is less experienced than the owner if it's his name over the door, if your problem still gets resolved? No, not at all.

So not knowing OP's details of the contract with $CUSTOMER, you can't assume either way.

Generally speaking, your freelance profile through an online service is going to only get you more gig work through that service. Their contract typically stipulates that outright. If you want to transition away from that, you will need to set up your own website elsewhere and figure out how to get consulting work through a different pipeline. You probably need a website and a portfolio of some sort, plus a payment mechanism, description of services and means to start promoting yourself.

All of these other things are additional business skills you will need on top of whatever central skill (like programming) that you are actually selling. If you can figure them out, great. If you can't, you might have newfound appreciation for why the service has value.

I am doing this as a writer, not a coder. Having my gig work via a service is my bread-and-butter and security to fall back on while I develop more lucrative stuff that I enjoy more, like polishing resumes.