You may ask, 'If we're going to build you a private team, isn't that the same thing a development shop or agency does?' Yes, but with several improvements:
- Gun.io developers are either fully-dedicated to a client or split across two small clients. They have zero pressure to work on other projects (to the detriment of yours).
- Gun.io freelancers are limited to a maximum of 30 hours per week of billed work. They are not run-down & sleep-drived from constant death marches for other clients.
- Gun.io has a "bench" of 25,000+. We can introduce the right people at the right times at the right measure. Your budget can be divided across different skillsets such that every dollar is fully maximized.
Agencies are weakened by the payroll plague
Shops and agencies come in different sizes. One to three person shops are very common, and we often work with them to provide services (indeed, they are effectively small groups of freelancers with a shared billing method).
However, once a shop gets into the four to ten headcount range, they will start to accrue a greater and greater payroll liability, which puts greater and greater pressure on their sales teams to keep project billing smooth and consistent.
Ten good software engineers will easily top a total fixed payroll of $1,500,000 annually. This means that the shop absolutely must come up with $125,000/month just to meet their engineering expenses. As projects ebb and flow, the only way to do this is to (a) book more & bill clients all of the time and/or (b) squeeze as much work from each person as possible. In other words, you've got overworked people who simply have to maximize their coding time beyond fruitful levels in order to pay themselves, let alone support the marketing, sales, rent, and other administrative expenses of the business.
Furthermore, agencies with a fixed, recurring payroll are incentivized to assign the next available employee to a client's project — rather than the best one for the job. An idle employee who is drawing a salary is death for the agency. It is hard for them to avoid billing you the B-player if they are available rather than hiring the particular A-player with the exact skill set that you require. Irrespective of whether or not this employee knows your stack or desired technology, the agency is encouraged to tell you that they do.
Agencies must remain on the Agency Treadmill
An agency cannot stay in business unless it keeps bringing in new clients. You are the most important person on their list the minute you walk into their office. And once you sign, your importance to the company's leadership only declines as you get close to your maximum budget amount. "At first they were great..." is a common refrain we hear from clients who've been burned by agencies before.
Fixed-bidding makes it even more difficult
Fixed bids worsen the Agency Treadmill problem. Since agencies require fresh business to survive, agencies must say "yes" to deals which infuse their business with cash, even if they may have trouble delivering on those commitments. By the time work must be delivered, the client's money has already been spent (typically to finance the previous months' operations). This business model and pricing model combination encourages agencies to take on more than they can handle and to kick the can down the road with your money. When it's time to deliver on your project's critical final stages, the agency's leadership is already courting new business.
Indeed, not every agency is plagued by the twin problems of an expensive payroll that they must manage and a sporadic supply of clients that they must squeeze. Some agencies — particurly the big ones — have made it: they are resilient, they work with reputable clients, and they hire excellent talent (and treat them well).
But, we believe in our business, and our business model. We are confident that our approach bests a typical agency's approach head-to-head, without question.
After having read our essay, whether you're intrigued or shaking your head in disagreement, we encourage you to get in touch. We'd love to hear your take.
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