Independent Contractor Costs Impact Quality of Results

Independent contractor costs have an impact on the quality of the services they provide.

An online business that hires contractors will not surprisingly find that the better the contractor, the higher the cost of hiring that person. High demand brings higher prices.

The hiring manager then must decide the limit to the budget and the level of quality that should come with it.

All businesses have three major financial targets: revenue, cost and profit. Business financial cultures are usually either revenue driven, cost driven or a balance between the two.

A billion dollar corporation where I worked for many years was highly revenue driven. The executives were unafraid to take big risks and spend big money if it meant the potential for even bigger revenue and profit down the road.

I then went to work for another billion dollar corporation that was highly cost driven. Executives required justification for every expense. Salaries had to fit a specific set of rules.

If a highly talented job candidate came along, that person would not be hired if he or she asked for a salary above the guidelines. It didn’t matter if they could produce more revenue than the average employee. The same was true of independent contractors.

Small businesses and especially solo businesses tend to be more cost driven. They often are in the early stages of a lifespan, face a hotly competitive environment or are just struggling to survive. They often don’t have the cash or the predictable profit margins and revenue to pay for expensive contractors.

So they hire the less expensive ones. If they do it with realistic expectations, they know they have to manage the quality issue.

Costs Versus Quality Impact

Small businesses that need to hire less expensive contractors for online work end up with a risk on the quality side of the work.

But several steps by the manager can improve on the problem:

• Find one just starting out and willing to accept lower rates.
• Seek the maximum productivity from the contractor. If quality is a bit weak, at least the quantity of the work might offer more value.
• Know how to improve the quality of the work. For example, the manager who knows how to write can improve on an article by an independent writer.
• If the work results in higher revenue, use that same contractor again and start paying more. They are worth the money.

I worked as a contractor and hired many of them. I can say with confidence that some independent contractors at any price will produce good results and others will produce bad ones.

The good ones I kept hiring over and over again and started paying more. So my independent contractor costs started to increase, but so did the quality of my sites. For some of them whose business and reputation grew, I had to pay more anyway if I wanted to keep using them. And I did because they had a positive impact on my business.

Unfortunately, some were a bust. They were unreliable or produced quality below my expectations. I didn’t hire them again, nor did I need to. I identified contractors who gave me a good balance between cost and quality.