Entrepreneur vs Freelancer – Is there a difference?

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I recently watched a short video on David Siteman Garland’s show, The Rise to the Top in which Seth Godin explains the difference between being a freelancer and being an entrepreneur.

Here’s what he said (in essence):

The freelancer

A freelancer is someone who basically trades hours for money. If I spend a certain number of hours designing a web site, for example, I can then send an invoice to my client for x number of hours.

Under this definition, the most money a freelancer can make is equal to the number of hours in any given month multiplied by your going rate.

The entrepreneur

Conversely, he defines an entrepreneur as someone who can make money during all hours of the day, even when he’s sleeping.

An entrepreneur focuses on building something bigger than himself/herself. Something that can generate passive income. Something that can grow exponentially in relation to the number of hours you put into it.

(You might also like: 9 ways designers can generate passive income)

Do you agree?

So is this the true difference between freelancers and entrepreneurs?

Do you believe there really is a difference between a freelancer and an entrepreneur? Leave a comment and let me know.

A wrench in the works

Here’s the wrench that I just can’t shake. I’ve got one hold up on these definitions:

What about the designer or freelancer who doesn’t charge by the hour, but charges by project?

Are they a freelancer (essentially doing the same work as the “freelancer” Seth describes) or are they an entrepreneur (getting paid more per hour depending on how quickly they complete a project)?

Why charging by project turns you into an entrepreneur

Seth’s theory and definitions just reinforces the theory I have been a proponent of for ages: Charging by the project instead of by the hour is still the best option.

And that’s the moment when (according to Seth Godin) you transfer from freelancer to entrepreneur.

Imagine you’re charging $100 for a project.

If you complete the project in 1 hour, your income rate is $100 and hour.

But if you decide your going rate is $60 and you complete the project in an hour, you’ve lost money.

So, if your confident in getting the job done well and quickly, charging by project is really the way to go!

Do you agree? Let me know in the comments.

Both are great options!

Assuming you subscribe to Seth’s theory, there’s a pretty big difference between an entrepreneur and a freelancer.

But neither one is better than another.

Whichever one fits you best is the one you should run with.

So which are you? An entrepreneur or a freelancer?

About Preston D Lee

Preston is a web designer, entrepreneur, and the founder of this blog. @prestondlee

Comments

  1. Nice post Preston. Thanks for sharing.

  2. The difference … the freelancer will need the timer with “ding-ding” sounds, distraction!
    Entrepreneur get more peace of mind to focus as appose to look-up the clock…tic tac tic tac!
    Freelance sometime lose track of hours…will cheat, entrepreneur take few breaks to refresh.
    Entrepreneur is still the way to go!

  3. There is a slight difference in the freelancer and entrepreneur. I believe that if you can change your thinking after you figure out how to generate income, you can start using strategies to increase income. It is that moment you truly become an entrepreneur.
    I have been a struggling freelancer for many years. I have other obligations in my life that have kept me in the low income mode.
    I have one client that I have discussed a flat rate per job. These jobs are among my favorite and I usually finish the jobs before it matches my hourly rate. My goal is to get enough clients, like this one, where I design the piece and hire techs to create the file art.
    Currently, I attend a Mastermind group once a week where we generate and keep each other accountable. We decided this week to spend time on each person in our core group to help accelerate our processes. We are taking 3 half hour daily session to support each others projects.
    I appreciate GraphicDesignBlender.com for discussing everything related to the business of art. Looking forward to the next post.

  4. Hi Preston,

    interesting thought you have. I find the difference confusing as well.

    To me, the difference between a freelancer and an entrepreneur is mainly that an entrepreneur dreams of transforming his small business into something much larger. That someday his company will be more then just him. Therefore this person will take more risks, because the reward can also be bigger. There is more at stake.
    An entrepreneur will also see more chances, even besides his own niche,

    A freelancer, on the other hand, is looking for freedom and do not want to work in a large(r) organization. Instead, they build smaller businesses in which they feel more comfortable. The freelancer values the independence in running the shop.
    That doesn’t mean they work out of an attic. They could have their own office, and employ some employees.

  5. Im a freelance artist and prefer and usually offer clients a monthly fee with a 3, 6, 12, month contract. Depending on the client it can be paid at the beginning or the end of the month. I never charge my the hour.

  6. In my own work (preparing print images for graphic designers), I prefer to charge strictly by the hour, except for a few a la carte services. There is no good way for me to closely estimate most coming projects, how much I’m going to be asked to do, and how “together” it all will be when it arrives (or AS portions arrive). Even if I’ve provided a rough estimate, I still just charge actual time, higher or lower.

    There is no “winner” and “loser”.

  7. I always thought that freelancers charged per project anyways, and that the big difference between an entrepreneur and a freelancer is that you don’t have employees working under you. However, if you are able to earn passive income by selling products, then that takes away the “strictly freelancer” reference, as one no longer sells time as their commodity. What do other people think on this?

  8. I charge by project. For example: $250.00 minimum 2 hours for shooting photos and 1 photo CD (unedited). $75 deposit required (this is nonrefundable and is subtract from the $250 which will leave your final minimum 2 hours billing at $175).

    $425.00 for 3 hours; $600.00 for 4 hours

    And I still consider myself a freelancer. An entrepreneur to me is someone who has their clients lined up week after week and a small staff (at least). Since I moved this summer I have found myself trying to get back in the groove.

    Nevertheless, I am still in contact with my old clients; but unfortunately, they do not have anything big happening. When you are out of sight then you are out of mind.

  9. Charging per project is not enough to make you an entrepreneur. You’re still trading direct production work for dollars, and there is still a fairly finite number of projects you can complete in a month. If you can currently complete 2 projects in a month you might be able to do 3 or 4 with more experience, but not 10 or 20. You’re still paid for your labour and limited by your time.

    Being entrepreneurial is about leveraging processes, people or systems to do more than you can alone.

  10. I’d argue that charging by the project still has it’s limitations, you have to charge something approximating what it would work out to at an hourly rate or you’ll just get undercut by a freelancer. The thing that turns a freelancer into an entrepreneur is building a team, a company and a range of services that can earn money passively, to the extent that you may not have to work anymore at all; your team/services/systems do it all for you.

  11. That video interview with Seth Godin is spot on! But, your view does not quite align with that of Seth’s.

    The way you charge for projects does not determine whether you’re an entrepreneur or not. It’s the way your business operates with and without you.

    I run a web design studio in sunny South Africa. We charge per project. But, that project rate was established by determining our hourly rate, billable hours in a day (cause you don’t actually work a full 8 hours a day), and on average how many hours it takes us to complete a project with certain functionalities. Why? Because clients understand project rates better than hourly rates. Simple. But, it was still our hourly rate that determined the total project cost.

    So charging per project is closely intertwined with hourly rates. If it’s not, then you’re just guessing and if you’re guessing, I can 100% guarantee you that you’re losing money!!

    That sir, does not define entrepreneurship. (Still love your blog though, keep it up!)

  12. For the past 12 years, I’ve done both, doing large projects on a continuing basis for a monthly retainer (although it’s still trading hours for dollars) and developing a series of projects I publish for passive income. The goal is to move completely away from the retainer clients. I have no interest in building a “team” other than those I hire specifically for limited periods of time. I’ve done the “entrepreneurial thing”, including a staff of eight, our own facility, and lots of clients, built from my pocket. I’ve never been so stressed, hated graphics more, and made less money. Some artists thrive in a communal environment. I’m more or a loner, I guess…

  13. Interesting take on the business problem. I fined the line between the two (entrepreneur and freelancer) to be somewhat blurred. Frankly, due to the realities of residing in a rural community I take on the characteristics of both. Example, my primary work is web and graphics design; but due to location I take on a wide variety of technology related tasks (computer repair, network design and implementation, etc). But when working with smaller businesses I try to position myself so that I can become part of their team (here they like the term consultant). Regardless of the situation, I am always looking for the opportunity to grow income-either directly or passively. Conclusion, I operate in both worlds; and it pays the bills…

  14. Thanks for sharing Preston, working per project is better for me.

  15. The descriptions could be correct but there are some exceptions like the example you gave on per-project payments. Freelance bloggers are another as they don’t earn by the hour. They just write posts and earn through ads.

    • I would have to disagree. As a blogger, I make money in more ways than through ads and I don’t necessarily make more money the more posts I write. Therefore, I am an entrepreneur. However, freelance bloggers get paid for each post they write. Thus trading hours for money. Freelancing.

  16. Preston,

    Thanks for posting this question. Without stating it directly I’m left with the impression that you agree with Mr. Godin’s conjecture: Freelancer vs Entrepreneur and his explanation of the two….Most of the comments here appear to be in agreement also.
    Please allow me to add, before I go on…I’m older (over 60). Being older is more than thinning hair and having some arthritic joints…it means I may have a bit more perspective, historical and otherwise, life experience and, oddly enough, knowledge about words and their meanings.
    The term “entrepreneur”, a French word, in use since the 1880′s has almost totally lost its meaning today. It’s bandied about as “genius”, “expert” and “brilliant” are, to name a few. Who wouldn’t want to be one of the above but , are you? I’m involved with the business of “naming” things so, I understand the lexical shifts that words take in society.
    An entrepreneur is really someone who by their own devices and/or with help from others creates a new idea, a new product or business…something that has not been done before. Simply doing the same thing slightly different than others does not make one an entrepreneur. It may be shocking to some but, Mark Zuckerberg is not an entrepreneur…My Space.com preceded him. Admittedly, he certainly has capitalized on the theme. In reality there are very few individuals in this elite category. Einstein, Bell, Edison, Jonas Salk, Richard Branson, Bill Gates and perhaps Steve Jobs are a few examples of real entrepreneurs…well known and new respectively.
    Godin’s idea of saying a freelancer only charges by the hour and that an entrepreneur charges by the project is not only facile minded at best but objectively incorrect. How the two billing methods are conflated is beyond common sense and logic.
    From my understanding his blog is quite successful and widely read.
    As they say…be careful of what you wish for and be careful of what you read.

    • Alan,
      You’ve missed the point entirely. Seth never said that the per project and per hour charging was the determining factor between freelancing and entrepreneurship. I simply said that charging by project will get you closer to entrepreneurship and trading money for hours worked will turn you into more of a freelancer.

      • Preston,
        I haven’t missed any point. People these days simply don’t understand the true meaning of the word “entrepreneur”. The incorrect view is seen in virtually every comment on this page. I see this same sentiment everywhere these days…fini.

  17. The way I’ve always looked at it…a freelancer works for other designers or agencies as a vendor…if you have your own l clients with whom you work directly, you are a design studio and an entrepreneur.

  18. James Katorski says:

    As I enter the end of my re-training into the Design field, after some 30 years as a manufacturing-hands-on laborer, there’s one thing I’m exploring, and that is finding several different ways of earning income(s). In today’s ever-changing business and technology world, it seems putting all your eggs in one basket is a huge gamble. Things can change on the drop of a dime, and you can be left without. This also opens potential to strike a new “niche” that could take off, making for “the sweet life”. Multiple facets to your work is the new norm in this field, and many of my acquaintances are doing just that with great, or at least good enough to raise families types of results.

  19. I totally agree with the analogy. In addition, as a freelancer grows and reaches the tipping point of working max hours per day, the freelancer could become an entrepreneur by employing others or outsourcing.

  20. I would disagree that a freelancer is simply a paid hourly person with limited income potential. It is amazing how society can value the written word. If you build it they will come is true for the freelancer. Whether you call it a project, hourly fee, or a business the key is creating something that people want. A lot of people want. It is the better mousetrap theory. If it is so good people will pay for it.

    Work on creating great content.
    Wayne Melton

  21. I know a lot of freelancers who would like to consider themselves Entrepreneur’s but in truth I think the definition you’ve given above is about right. I wouldn’t buy into the idea that charging by the project makes you an Entrepreneur. I guess the distinction would come where by you charge for the hour and then pay someone else to do the work for you – I’d say that would be considered entrepreneurial, but possibly also dishonest.

  22. Richie Crawford says:

    Nice post Preston! However, today I should say that the line between freelancing and the so-called “real work” is starting to blur. That is because you could easily get full time remote professionals now. For instance, https://www.staff.com has a huge database of experts of different skills that you could hire for full time. That was not totally possible before. It is an exciting time for technology and employment to merge.

  23. Good point! In my opinion professional freelancer sells result rather than hours. Otherwise he/she just converts to a usual employee. But I think charging on a per project basis does not yet make you an enterpreneur. True enterpreneur is a person who organizes processes and people but not who does the work himself.

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  1. [...] Entrepreneur vs Freelancer – Is there a difference? | Graphic Design …By Preston D LeeEntrepreneur vs Freelancer – Is there a difference? Posted November 26th, 2012 by Preston D Lee & filed under Freelancing. c89a80_c32a92cb94f3865d91a73992f6029e44. I recently watched a short video on David Siteman Garland's show …Graphic Design Blender [...]

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