1.2

The costs of doing business

To work independently, professionals can’t just charge the value of their time and knowledge — they also have to consider the cost of bringing that service to market.Before the internet, professionals faced high marketplace costs for advertising, marketing, record keeping, tax withholding, benefits procurement, and other traditional business functions. Geography and physical distance amplified the costs of coordination too, as professionals relied on phone, mail, and other inefficient methods of communication.Few could afford those marketplace costs alone. The firm shouldered those costs, allowing professionals to produce deliverables matching their core skill sets for a steady paycheck. For the perceived security of full-time employment, professionals traded their ability to earn their full profit potential by contracting directly with clients.That arrangement proved wildly popular. Freelancing was rare and, in many industries, essentially unheard of, for the majority of the ‘70s and ‘80s — by 1990, just 12.5% of Americans described themselves as self-employed.