In an already-challenging market, many wineries in the post-COVID world have had to restructure their businesses, laying-off or furloughing some employees, while asking others, whose jobs allow it, to work from home. While this has inflicted some pain, wineries are embracing the added flexibility of utilizing outsourced marketing staff to continue to get the job done. Here, we look at the costs of maintaining an in-house crew, compared to the costs of outsourcing the work to specialized independent contractors.

There are many benefits to having marketing people in-house, always there, just waiting for their next request. For starters, your in-house marketing folks are already familiar with the lay of the land; they understand the brand, and they know what their stakeholders like. It’s very easy, in this case, to shoot off a quick email to someone on your team and say “We need this” and that’s often all the hand-off that’s required. We’ve come to depend upon those in-house design heroes who can just as quickly prepare a wine club insert for printing as they can cue up an email newsletter template. But the in-house folks do have a limited skill-set, and while copy-and-pasting text into an email template is a necessary task, how confident are your in-house designers when it comes to creating segmented user funnels on the website, or understanding the metrics in order to optimize conversions? Being in-house naturally places them in a rather insulated role — their livelihoods depend on getting stakeholder approvals rather than actually bringing business in the door.

This is where independent contractors come in. Independent contractors, being immersed in the industry with exposure to multiple brands, are able to stay abreast of new developments and innovative approaches as they arise. Also, by the very nature of their entrepreneurial existence, they are acutely aware of best practices for attracting new audiences, increasing engagement, and optimizing conversions. Typically being more specialized, three ¼-time contractors can almost always accomplish more in their own disciplines than one in-house generalist, at a comparable or smaller cost.

How confident are your in-house designers when it comes to creating segmented user funnels on your website, or understanding the metrics in order to optimize conversions?

Although the hourly rate is higher for outsourced marketing talent, a winery can avoid the added expenses that come with maintaining W2 employees: Social Security and MediCare Tax, Workers’ Compensation Insurance, medical and dental coverage, vacation and sick leave, and retirement contributions. Added to these expenses are the costs of a work station, a computer, software, and training — expenses which, on the contractor side, are covered by the contractors themselves.

 

What is the true cost of a full-time employee, and how does it compare with utilizing contractors for the same work? Here’s a quick comparison:

Comparing the Costs of a Full-Time Employee
with those of hiring Specialized Contractors

Full-Time Employee
Pie chart showing the costs associated with maintaining an in-house marketing person
While there are many benefits to having some of your marketing capabilities in-house, hiring an in-house person locks you into a fixed cost, approximately 25% of which doesn't go towards employee salary.
Hiring Specialized Contractors
Column chart showing relative costs for wineries using outsourced marketing services
Hiring outside contractors means you can vary their involvement, and the overall marketing mix as your priorities change.

Of course, this doesn’t need to be an either/or scenario; contractors can be used to complement the skill set of your internal graphic designer, contributing strategic awareness and setting in place processes for your in-house folks to run with.

* “Employment Taxes” includes: Social Security Tax, 6.2%1, Medicare Tax,1.45%1, FUTA (Federal Unemployment Tax Act), 0.6%2, SUI (State Unemployment Insurance), 3.4%3, SDI (State Disability Insurance), 1.0%3, ETT (Employee Training Tax), 0.1%, and Workers’ Compensation Insurance, 3.0%

Source:

1 Social Security Fact Sheet. https://www.ssa.gov/news/press/factsheets/colafacts2020.pdf

2  Employment Taxes. https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes

3  California 2020 unemployment, disability and employment training tax rates and limits. https://taxnews.ey.com/news/2019-2001-california-2020-unemployment-disability-and-employment-training-tax-rates-and-limits

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