How to Manage Subcontractors at Your Agency

At some point, your agency gets busier than your team can handle. You have two options: hire full-time or use subcontractors.

Hiring full-time means payroll, benefits, and long-term commitment. Subcontractors are flexible but need managing. Both have tradeoffs.

This post covers how to use subcontractors effectively.

When to Use Subcontractors

Use subcontractors when:

You have project overflow but don't know if it's permanent
You need specialized skills you don't have in-house (iOS development, copywriting)
You're experimenting with a new service offering
You have predictable seasonal peaks

Don't use subcontractors when:

You're trying to save money on salary
You're avoiding benefits costs
You'd normally use a full-time employee

The mentality matters. Subcontractors are a scaling tool, not a cost-cutting tool.

Finding Good Subcontractors

Quality subcontractors are hard to find. Bad ones damage your reputation.

Where to find them:

Your network. Ask your team, clients, and other agency owners for referrals. Best subs come from personal networks.
Freelance platforms. Upwork, Toptal, Gun.io. These have vetting processes. You pay a commission but reduce risk.
Specialized communities. Dev communities, design communities, marketing communities. Post in places where good people congregate.
Agencies you trust. Partner agencies might have bandwidth to white-label work for you.

What to look for:

Portfolio or case studies showing work quality
References from previous clients or agencies
Clear communication style (responsive, professional)
Realistic estimates and timelines
Experience with your specific needs

Test small before going big. Give a small project to a new sub. See how they perform.

Contracts and Legal

Use a contractor agreement. It protects both sides.

Key clauses:

Scope: What work are they doing? What's included/excluded?
Payment: How much? When? What triggers payment?
Timeline: When is work due? What happens if they're late?
Revisions: How many revision rounds are included?
Confidentiality: They can't share your client's information
IP ownership: Who owns the work product? (Usually you do)
Communication: How often do you communicate? What's expected?
Termination: How can either party exit the agreement?

Get a lawyer to review contractor agreements, especially if you're doing significant work with subs.

Rate Expectations

What should you pay subcontractors?

Typical rates by skill:

Junior designer: $30-50/hour
Mid-level designer: $50-80/hour
Senior designer: $80-120+/hour
Junior developer: $40-60/hour
Mid-level developer: $60-100/hour
Senior developer: $100-150+/hour
Project manager: $40-60/hour
Copywriter: $50-100/hour

These vary by location, specialty, and experience.

How to price your work to subs:

If you charge client $150/hour and pay sub $80/hour, you keep $70/hour (47% margin). That's reasonable.

Don't squeeze subs too hard. Good subs have options. If you pay $50/hour and market rate is $75/hour, they'll go elsewhere.

How to bill clients with subs:

You have options:

Bill at your normal rate. Client doesn't know you're using a sub. The margin is yours.
Bill at sub's rate + markup. "This work is $80/hour, plus 20% fee. Total $96/hour." More transparent.
Fixed price project. You bid $10k. You pay sub $5k. You keep $5k. Margin is clear.

All are legitimate. Choose based on your business model and client expectations.

Managing Subcontractors

Once you've hired a sub, managing them is important.

Be clear on scope. Write down exactly what's needed. What are the deliverables? What's the quality bar? When is it due?

Bad communication leads to bad work.

Check-ins. For projects longer than a week, check in weekly. "How's it going? Any blockers?"

Quick check-ins catch problems early.

Quality review. Review work before handing to client. Subs need to know there's a quality gate.

You're responsible for client satisfaction. Review the work.

Payment on time. Pay subs on schedule. Late payments destroy trust and they'll take other work.

Feedback loop. Tell them what they did well and what needs improvement. Good subs want feedback.

Red Flags With Subcontractors

Watch for:

Slow communication. If they don't respond to messages within 24 hours, that's a signal. Problems compound when communication is slow.

Missed deadlines. First missed deadline is a warning. Second is a problem. Third and you're done.

Quality drops. If the first project is great and the third is mediocre, they're overbooked or burned out. Find someone else.

Scope creep. If they're constantly asking what else is included, they underestimated. Next time they'll quote lower. The quality suffers.

Ghosting. If they disappear mid-project, you have a serious problem. Contractually address this. You need a way to reclaim work and find replacement.

Building Long-Term Relationships

The best subs are ones you work with repeatedly.

After a successful project:

"That was great. I'd like to work together on the next project."
Keep them in the loop about upcoming work
Pay fairly so they're motivated to work with you again
Give honest feedback and appreciation

A stable of 3-5 trusted subs is a competitive advantage. They know your process.

They know your clients (at least the context). Quality improves.

Frequently Asked Questions

Should subs be exclusive? No. Subs work with multiple agencies. That's normal and expected. They shouldn't work with your competitors, but having other clients is fine.

What happens if a sub's work damages your client relationship? You take responsibility. You hired them. You're vouching for quality. Make it right with the client and find a new sub.

Can we hire a contractor full-time? It's complicated legally. If someone works 40+ hours/week exclusively for you, they're probably an employee per tax law, even if called a contractor. Consult a lawyer.

What if the sub is easier to work with than your own team? That's great. But be careful of over-relying on one person. If they leave, what happens?

Should subs use your PM tools? Ideally yes. Give them access to the project in your PM tool so work is tracked. If that's not possible, regular updates via email/messages work.

What about non-disclosure agreements? Absolutely. Subs should sign an NDA before seeing confidential client work.

Can tools like Huddle help with subcontractor management? If your subs use different PM tools, Huddle gives you visibility into all their work without switching tools. But ideally everyone uses the same PM system.

Subcontractors are a bridge. They let you take on overflow work without building permanent payroll. Use them strategically.

Treat them fairly. And build relationships with the good ones. Your ability to scale depends on them.