Difference Between Contractors, Freelancers and Consultants

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A lot of contractors starting out or who have just decided to change their work style are sometimes unsure what to call themselves – we hope this short article clears a little of the fog surrounding the various terms.

These three terms are often used interchangeably, but in fact, they are quite different. And these differences become particularly noticeable when you start talking about the financial side of things – as in, what people will expect to pay for each one and how they will expect to engage you. The short answer is that the consultant’s role is evaluate a client’s needs and provide expert advice and opinion on what needs to be done – whilst the contractor or freelancer role is generally to actually perform the work. Of the two latter ones, these are usually differentiated by the engagement model used. Let’s look briefly at each one individually:


A consultant is generally referred to as an ‘experienced professional’ and will provide expert knowledge in return for a fee. They tend to work in an advisory capacity only and are usually not accountable for the outcome of a consulting exercise. Some consultants have brought dramatic shifts in management thinking and improvements in the performance of organisations. Consultants can command a very high fee due to their years of experience and are seen as being some of the most knowledgeable people in their chosen field.


A contractor is also an experienced professional, but one who provides a specialist service in return for a fee. Unlike a consultant, a contractor will actually carry out physical work, although they may also advise on what that should be beforehand. Contractors are used by organisations that wish to acquire a given skill set for a period of time, but which do not want to employ someone permanently. As such, a ‘contract’ is usually full time but for a set period only – which can be extended if both parties agree.


The terms freelancer and contractor are often interchanged, but in general, they are two different things. Whilst a contractor will work full time for one client, or ‘employer’ on client site, a freelancer usually has their own premises (or works from home) and has multiple clients. Freelancers will work on a hourly basis and could have many different pieces of work ongoing for a number of different clients. Freelancers generally command similar rates of pay to contractors, but will only earn the same as a contractor if they bring in enough business across all of their clients, to enable them to work a similar number of hours as a full time contractor does.

In terms of how each is perceived by potential clients, and consequently how much each can charge, contractors and freelancers are seen as ‘rank and file’ – one of the workforce so to speak – while consultants can come in at an executive level, sometimes with no accountability.

So which one would you rather be?

Well for many roles it really makes no difference what you call yourself, you’ll be hired on your skills and experience and the contract role is predetermined by what the client demands. Something worth considering is that it may be slightly harder to win business as a consultant than it is to win business as a freelancer or contractor – as the requirement for your skills is often far less clearly defined, and therefore the cost much harder to justify.

Operating as a freelancer or contractor

Whichever route you opt for, the only skill set you need is the ability to do the job you are contracted to do – exactly as would be the case if you were going for a job in permanent employment. The only difference being that you do it as a contractor, working for one client full time, or as a freelancer, working a smaller number of hours per week (or on a project by project basis) for a number of clients.

Operating as a consultant

Read the latest books and follow your industry’s thought leaders online. Start to think about the theories and conceptual approaches, not just execution. Don’t get bogged down by the nitty-gritty execution details of your freelancing or contracting area and instead strive to understand the theoretical and conceptual underpinnings of why certain things work while others don’t. For example, as a web developer, that might mean to reading up on some human psychology, to understand why people approach and react to websites in different ways.

Remember anyone can make their CV or website look the part – but be sure you have the ability to provide true consultancy services before selling yourself as such, or you could get found out very quickly!

Merging the two

There is definitely an option to ‘cross between worlds’ in order to make yourself suitable for more types of work. As a contractor, it’s also a good way to move gradually into the consultancy environment, so let’s look at that approach first.

When you are brought in to a full time contract in a specific role, or when you are asked to carry out a specific piece of work as a freelancer, you may find that the people who have employed your services do not have a clear idea of exactly what it is they need you to do – or they think they do, but you can immediately see how it could be done better! As such, you could find yourself providing the type of advice up front which would traditionally fall more into the consultant’s realm. And whilst you might not get paid for the consultancy side of things, this provides great experience and will help you secure a consultancy job (if that’s what you want to do).

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