06 February 2023

How Much Does it Cost to Hire Software Developer: Software House, In-house Team or a Freelancer?


Virtually every industry – be it healthcare, finances, ecommerce, governments, legal, food and beverage or academic circles, as well as type of companies – startups up to large corporations, need to digitize their operations and services.  

When a company decides to engage software developers to create an app for them (private healthcare, diet app or online such as eBay), they better analyze the costs to be aware of what they can afford.  They should take into account that expenses will span from hiring and training to monthly salaries. The overall cost of employing a developer varies depending on numerous factors, including the developer's country of origin, skill level, and kind of contract. 

You should also think about if you require someone skilled in mobile app development, web app development, or all of these. Are you wondering between a software house and an individual developer?  It alters the overall picture in terms of engagement and professionalism, as well as the final software developer cost.

Naturally, hiring software developers from other nations with more advantageous exchange rates will be less expensive, but you must be ready for a remote method of monitoring work and interaction. 

The Cost of Hiring a Software Developer – Factors  

Over the recent years, and also today, there has been an increase in demand for software engineers. For this reason, you must provide alluring incentives for qualified software experts to select your business over rivals. Defining your requirements is the first stage in figuring out how much it will cost to engage a software developer - a special technical background, knowledge or contract. 

The hourly wages of such a specialist will depend on a variety of variables, including the country they live in, and area of specialty or knowledge of coding languages. Experienced developers can obviously charge more than the junior ones.  Read on if you wish to know the cost to contract a software developer.

Software developer: level of experience 

For entry-level software developers, the average hourly rate can range from $20 to $50 per hour. More experienced software developers, such as those with 5 or more years of experience, can command hourly rates of $50 to $75 or more. For a full time software developer, the average hourly rate can be $80 to $120 or more depending on the location, experience and skills required for the role. It can go up even to $120 per hour, if they are senior programmers with high command of various programming languages. The salary also depends on the candidate's experience in versatile and large scale projects, familiarity with databases, API or containers.  


However, it's important to note that the cost of hiring a developer can be much higher in certain regions, such as Silicon Valley or New York City, and much lower in other regions. For example, competent software developers from China, India and some European countries will charge less due to currency and big pool of talent.  In addition, the cost can be influenced by the specific industry or field you are looking to hire for, like mobile app developer, web developer, game developer, or other niche field of software development. It's also crucial to account for unforeseen expenses like local taxes and laws, different time zones and language challenges. 

Type of employment 

Another factor to consider is the type of engagement you are looking to have with the developer, whether it be a full-time employee, salary vs hourly rate, contractor, or an offshore team. Full-time employees and contractors will have different cost structures and legally required benefits, with contractor engagement often being more expensive and offshore teams often being cheaper. If you decide to collaborate on the basis of full-time contract, the overall software developer cost will go up compared with using an independent contractor who deals with taxes independently. Think also of relocation, training and average cost of benefits for software developer.

Specific skills 

Software developers who possess specialized skills or certifications in specific technologies or platforms can command higher salaries. For example, a developer with experience in machine learning or cybersecurity will expect a higher salary than a developer with more general skills. Additionally, different rates will apply for a react native developer who can create a platform-adaptable app, a DevOps expert knowledgeable in continuous integration technologies like Jenkins or GoCD, and a hybrid app developer skilled in Flutter. 

It is also important to remember that cost should not be the only consideration when hiring a software developer. Experience, skills, and a good fit with your team and company culture are also important factors to take into account. Ultimately, the cost of hiring a developer will depend on your specific needs and budget, so it's important to carefully consider all factors before making a hiring decision. 

Should You Hire Software Developers or a Software Company? Comparison 

When choosing, you need to consider not only the software development cost, hiring expenses, but also the purchase of tools, support or collaboration with the project team. 

Hiring a Software Developer: 

Typically costs less than hiring a software development company, but you will have to cover recruitment costs. Recruitment expenses depend on onboarding, and providing employees with equipment and the right tools. In some cases, you will need to also consider training costs and dedicate time and resources to introducing them into your particular software development project.  A freelance developer or a team of in house developers may seem like a cheaper option, but there are hidden costs involved not easy to spot at the first glance.  

Hiring an in house developers team may not be the best solution if your budget is limited. Firstly, even when the project is completed or there is some downtime, you still have a team that needs to be paid on a regular basis. Of course, if you have to maintain a number of different projects for your business, such as upgrading applications, modernizing websites and so on, this type of support is a given - but in other cases you may be paying for less service and wasting resources. 

What's more, many companies also offer benefits such as health insurance, retirement plans, and continuing education opportunities, which can add to the overall cost of hiring a developer. So, we get back to the expenses reality of hiring full-time employees. If you need reliable, long-term software developers, that's the way to go. But if your projects and requirements for them change (e.g. a wide range of programming languages and skills - will you hire software developers time and time again?), a software company may be a more cost-effective solution. 

Freelance developers may be more flexible when it comes to working on a project on a part-time or hourly basis. When you consider contractor services, their working day does not conform to rigidly set office hours, unlike that of an employee or a software house. They can work throughout the evenings or weekends to complete the job more quickly. 

Hiring a Software Company: 

A software company typically has a team of developers with different levels of experience and abilities, and can provide a wider range of services, as well as deliver a more robust and scalable solution. A large group of experts with different areas of expertise and skills in fields such as software development, project management, front-end and back-end are provided when you hire a software house. They frequently conduct testing to ensure quality control of the final product and have reliable processes to follow. 

A software company usually has a more established infrastructure and access to more resources, such as development tools and testing equipment. The development process involves dozens of people at all stages of the product lifecycle.  After many successful software development projects, the stages are clearly identified and validated. A software house has more resources at its disposal, allowing it to buy an expensive testing platform, try out a new tool or hire software developers when needed. 

A software company typically has a dedicated project manager who can ensure that projects are completed on time and within budget, and who can help coordinate communication and collaboration between different team members. In house developers would need internal leadership and an experienced PM, at additional cost. No one can be good at everything, so a freelancer won't be very helpful as they won't have the full perspective or support of a coordinator familiar with the client's previous projects. 

A software company is more likely to provide support and maintenance after the product has been deployed. They have the resources to do so and very often add these services to their offering. For a software house, a good long-term relationship with the customer is of paramount importance. You can often count on continued support from them, as they want to maintain their excellent reputation and positive customer feedback. 

With a software company, there is less risk of delays or interruptions in the project if a key developer leaves or becomes unavailable. They delivered many projects before, so they have processes in place to act quickly and find a new person, update a process or get the necessary resources. The company will be able to avoid mistakes and prolonged phases if you have a professional software developer staff ready to assess and manage the specific process and potential delays.

Hiring Software Developers Has Never Been Easier 

Let's face it, software development costs can sometimes skyrocket. You must take into account your primary goals and requirements while picking a trustworthy provider. Do you need an external dedicated team that is ready and able to manage your IT operations on a short-term or long-term basis? Or perhaps an internal team that knows your processes inside out? Think about the software development cost, the time and resource commitment, and the level of service.  What about the cost of education for a software developer?

If you need a reliable and experienced partner with a proven track record, we are here to help you with hiring developers that will carry out successful projects! Please contact us if you need assistance with software development. 

Paweł Leszkowicz
Recruitment Specialist