In today's dynamic business world, freelancers are gaining increasing importance as they offer a variety of advantages to companies. These include specialized expertise, experience, flexibility, and efficiency, which are essential for success and competitiveness. 

However, some companies still hesitate to collaborate with freelancers due to the fear of high costs. Yet, the financial benefits of working with freelancers make it profitable, especially for project-based companies. In the following, we would like to present some factors regarding this:

1. Payroll taxes and social contributions:

   Freelancers handle their own social contributions. In contrast, for full-time employees, in addition to their fixed monthly salary, social contributions need to be made, which can vary significantly depending on the country and collective bargaining agreements, typically ranging from 20% to 40% of the gross salary. The costs incurred include employer contributions to health insurance, pension insurance, unemployment insurance, or long-term care insurance.

2. Infrastructure and equipment costs:

   Freelancers work from their own offices and are responsible for their own equipment. This eliminates the need for the company to incur costs for additional infrastructure and the procurement of work tools. On the other hand, employed staff usually work in the company's offices and rely on corresponding infrastructure such as office buildings, workstations, computers, software, or telephone systems.

3. Training and development costs:

   Freelancers are responsible for their own ongoing education. They invest in expanding their expertise at their own expense to stay competitive. In contrast, the onboarding of full-time employees requires intensive training and induction phases to familiarize them with tasks, processes, and the company culture. Additionally, the company incurs costs for training and continuous development measures to keep employees' knowledge and skills up to date.

4. Vacation or sick days:

   Freelancers typically do not have a fixed entitlement to vacation or sick days and are only paid for the work actually performed. In contrast, full-time employees usually receive paid vacation and sick days, even when they are not in the office.

5. Predictable, project-based compensation:

   Full-time employees have a contractually agreed weekly working hours, while freelancers have flexible working hours and can adjust their hours according to project requirements. This allows for adjusting costs precisely to the scope and duration of the project. Only the hours worked productively are billed.

A healthy mix of permanent employees and freelancers is optimal for many companies. Freelancers can often execute projects at a lower cost than their full-time colleagues, especially when companies pay close attention to "value for money."

But how do the costs actually compare?

Let's assume a company initiates a new project with a duration of six months and requires a project manager. The HR department can either hire a full-time manager or engage a freelancer.

Our infographic shows a comparison of the costs incurred, exemplified by the German market.