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Every business is unique, and there’s no one-size-fits-all solution for workforce planning. Some companies prefer to work with permanent staff, while others benefit from a flexible workforce. Hiring an agency worker or a freelancer is an accessible way to scale quickly.
But what about the costs of flexible work? In this article, we explore how much an agency worker costs and compare this to hiring your own staff or working with freelance professionals via Temper.
The cost structure of agency workers and freelancers
Traditional staffing agencies have long been the standard for flexible personnel. However, innovative alternatives now exist, such as online platforms that directly connect businesses with flexible freelance professionals. These platforms provide more freedom and flexibility in filling (temporary) positions while catering to the growing demand among workers for autonomy and flexibility.
The costs of an agency worker
The cost of hiring an agency worker consists of two main components: hourly wages and the conversion factor.
The hourly wage depends on the industry, experience level, and sometimes location. When hiring through a staffing agency, an additional percentage is applied—this is the conversion factor or margin.
The conversion factor is a fixed percentage that covers additional costs, such as:
- Recruitment and selection
- Vacation pay and leave
- Pension costs and social security contributions
- Insurance
- Absence management, legal support, payroll, and HR administration
What’s included in the conversion factor may vary depending on the temporary worker agency or industry, so it’s essential to check the details before signing a contract.
The costs of a freelancer
When hiring a freelancer, most costs come from the hourly rate. The advantage of freelancers, especially when seeking flexibility, is that you only pay for the hours worked. This allows you to scale up and down quickly and use freelancers strategically during peak times or for specific projects.
For more details on freelancer costs, read our dedicated blog What are the costs of hiring a freelancer?, or use our pricing calculator for an exact cost estimate of hiring a freelancer via Temper.
Calculating the hourly cost of an agency worker
Many traditional staffing agencies do not provide transparent cost breakdowns, raising questions about the total hourly wage of an agency worker. To calculate this, multiply the base wage by the conversion factor, which typically ranges between 1.9 and 2.6, depending on the agency and industry. The hourly wage of the temporary worker must at least meet the minimum wage requirements.
Agency worker cost calculation examples
Here are some simple calculations of the hourly cost for an agency worker based on different conversion factors:
Example 1: Wage + conversion factor 1.9
€20.00 (gross hourly wage) × 1.9 = €38.00 per hour (excluding VAT)
Example 2: Wage + conversion factor 2.3
€25.00 (gross hourly wage) × 2.3 = €57.50 per hour (excluding VAT)
Example 3: Wage + conversion factor 2.6
€19.00 (gross hourly wage) × 2.6 = €49.40 per hour (excluding VAT)
Tip: Don’t just focus on the wage or conversion factor. A higher hourly wage might still be more cost-effective if the conversion factor is lower—and vice versa.
Calculating the hourly cost of a freelancer
In addition to agency workers, it can be beneficial to explore other flexible workforce solutions, such as hiring freelance professionals via platforms for flexible work. Their hourly rates are typically market-based and not subject to fixed wage regulations.
Freelancer costs via a platform like Temper
When hiring a freelancer through Temper, you pay a transparent fee with no hidden costs:
- Freelancer’s hourly rate
- Platform fee per worked hour (€3.90)
Use our pricing calculator to quickly check the average freelancer costs in your sector.
Cost comparison: agency worker vs. freelancer
Now that we’ve covered the costs of agency workers and freelancers, let’s compare their total hourly costs using the same base rate but different conversion factors (for agency workers) and platform fees (for freelancers via Temper).
Agency workers vs. other flexible workforce options
As mentioned earlier, there’s no one-size-fits-all solution for workforce planning. The best approach is to compare different flexible workforce solutions to determine what works best for your business. We've already compared the costs of agency workers and freelancers. Below is an overview of additional key differences between staffing options.
Choosing the right flexible workforce solution
Here are some key tips for finding the right flexible staffing solution for your needs:
✅ Find a reliable partner: Flexible professionals are no longer only available through staffing agencies. Digital platforms like Temper directly connect businesses with professionals, offering a wide range of skilled professionals.
✅ Review cost structures: Does the staffing agency or platform clearly communicate its pricing, conversion factors, and additional fees? Transparency is key.
✅ Check reviews and industry experience: Look for feedback from other businesses—preferably within your industry—to find the best staffing solution.
✅ Industry expertise matters: Some agencies or platforms specialize in specific sectors, allowing them to provide better and faster matches.
Conclusion
The right flexible staffing solution depends on your specific needs. Agency workers often carry higher fixed costs compared to freelancers, limiting the adaptability some businesses may need. When making a choice, carefully review the cost structure, additional expenses, and contract terms to ensure you get the best balance of flexibility, cost efficiency, and scalability.
Want to learn more about how Temper can help you scale smarter? Get in contact today.
