Contract vs. Permanent: Profit Discussion

Hello everyone,

My colleague and I are having a spirited debate and would love your input.

We’re comparing two consultants: one billing £400k annually as a freelancer and another billing £200k annually as a permanent employee.

The question is: who is generating more profit for the business?

Historically, our incentive targets were set at “x” for freelancers and 50% of “x” for permanent employees. Recently, they’ve been adjusted to be equal, which means that permanent consultants are now competing against freelancers who may be less experienced.

It’s important to note that freelancing and permanent roles are handled separately in our company, each with its own line management structure across regions.

Business owners, we’d appreciate your insights! What are your thoughts?