Every growing studio hits the same fork repeatedly: bring the work in-house with an employee, or keep flexing with freelancers. The day-rate comparison most founders do in their head materially understates the cost of employment — and also understates the value.

The true cost of an employee

Start with salary, then add employer's national insurance at 15% above a low threshold, pension auto-enrolment contributions, holiday pay (folded into salary but real — you're paying for around 33 days a year of no output), sick pay exposure, equipment and software seats, and the recruitment cost amortised over however long they stay. A £45,000 designer typically costs £53,000–£56,000 in cash before overheads, and their productive hours — after leave, training, pitching and studio life — are perhaps 1,500 a year. That's an effective cost of £35+ per productive hour for someone billed out at multiples of that, which is exactly why utilisation, not headcount, is the number that decides studio profitability.

The true cost of a freelancer

A £350 day rate looks expensive against that salary until you remember it carries no NIC, no pension, no holiday, no idle time — you pay only for days you need. The costs are subtler: availability when your best freelancer is on someone else's project, knowledge walking out of the door after every job, and the management overhead of briefing from scratch. There's also a compliance edge: a freelancer who works like an employee — your hours, your desk, your direction, one client — can be reclassified, with employment taxes (and for larger engagers, off-payroll working rules) landing on the studio.

The decision rule

Hire when the work is recurring, core to your offer, and would keep a person at healthy utilisation — roughly, when you're consistently buying 3+ freelance days a week of the same skill. Stay freelance for genuine peaks, specialisms you need occasionally, and capabilities you're still testing. And model the hire on productive hours and utilisation, not on the optimistic assumption that a salary buys 46 working weeks of billable output.

We run this model with real studio numbers as part of capacity planning — ask your Practice team before the next hire, not after.