Several factors can affect the cost of hiring a software developer in 2024.
Countries with high costs of living tend to have higher rates. You can expect to pay more for a remote developer in the United States or Western Europe compared to someone in Eastern Europe or Latin America, for example.
Higher rates will be charged by developers with more experience and specialized skills. Senior developers with 5+ years of experience are typically more expensive than junior developers.
Developers with in-demand skills, such as machine learning or blockchain development, will be more expensive.
Average Hourly Rates for Software Engineers
The hourly rates for software engineers in the United States can vary widely based on several factors, including experience level, location, and specific skill sets. Here’s a detailed overview of the average hourly rates:
- Junior software developer: $36 – $43 per hour, according to Salary.com
- Mid-level developers: Generally charge between $55 and $65 per hour.
- Senior software engineer: Can command rates from $65 to $130 per hour, with some specialized roles reaching higher rates depending on the project requirements and company size
Based on location, this is the average cost of hiring software developers:
| Country | Average Salary (USD) | Average Hourly Rate (USD) |
| Canada | $80,000 – $100,000 | $40 – $60 |
| United States | $100,000 – $120,000 | $50 – $70 |
| Mexico | $20,000 – $30,000 | $10 – $20 |
| Brazil | $15,000 – $25,000 | $8 – $15 |
| Romania | $15,000 – $25,000 | $15 – $25 |
| Ukraine | $10,000 – $20,000 | $15 – $20 |
| Poland | $20,000 – $30,000 | $10 – $20 |
| India | $8,000 – $15,000 | $4 – $8 |
| Philippines | $5,000 – $12,000 | $3 – $6 |
| Germany | $60,000 – $80,000 | $30 – $40 |
| Japan | $50,000 – $70,000 | $25 – $35 |
Average Cost Per Hire
The average cost per hire for a software developer is around $4,000, according to Glassdoor. This figure represents the typical cost companies face when recruiting and onboarding a new software engineer. However, when hiring a full-time software developer, the total costs can be significantly higher.
According to various studies, the full-time employment costs for a software developer can range from $28,548 to $35,685. These costs include:
- Legally required benefits (7.6%)
- Insurance (7.8%)
- Paid leave (7.4%)
- Retirement and savings (3.5%)
- Supplemental pay like overtime (3.3%)
When factoring in the median annual wage for software developers, which is $110,140, according to the Bureau of Labour Statistics, the total yearly cost for an employer can amount to $142,741.
It’s important to note that these are ballpark figures, and the actual cost per hire for your organization will depend on multiple factors, such as the developer’s experience level, location, and the specific skills required for the role.
Factors that impact the cost of hiring a software developer
The final cost of hiring a remote developer is determined by many factors that you must consider.
- Location: rates tend to be higher in countries with a high cost of living, such as the US.
- Experience: developers with more experience and specialized skills will charge higher rates.
- Contract type and project complexity: developers hired on a project basis typically earn more than full-time employees.
- Infrastructure requirements: developers specialized in a specific niche, such as mobile app development or back-end web development, may charge more than generalists.
1. Geographic location
Why does it cost so much more to hire a developer in North America than to hire someone who lives in Latin America or Asia for example?
Places with a higher cost of living generally have higher developer rates. This is because developers need to charge enough to cover their basic expenses (housing, food, etc.) and maintain a desired standard of living.
A developer in the US with a high cost of living may need to charge $70/hour to cover their expenses, while a developer in Eastern Europe with a lower cost of living might be comfortable with $40/hour.
In regions with a large pool of skilled developers, competition can drive down rates. Conversely, areas with fewer developers may command higher rates due to limited supply.
Taxes and regulations can vary significantly by location. Freelancers in countries with high taxes or complex regulations may need to charge more to account for these additional costs.
Let’s look at a simple example of the average cost of hiring software developers in these different locations:
| Country | Average Salary (USD) | Average Hourly Rate (USD) |
| Canada | $80,000 – $100,000 | $40 – $60 |
| United States | $100,000 – $120,000 | $50 – $70 |
| Mexico | $20,000 – $30,000 | $10 – $20 |
| Brazil | $15,000 – $25,000 | $8 – $15 |
| Romania | $15,000 – $25,000 | $15 – $25 |
| Ukraine | $10,000 – $20,000 | $15 – $20 |
| Poland | $20,000 – $30,000 | $10 – $20 |
| India | $8,000 – $15,000 | $4 – $8 |
| Philippines | $5,000 – $12,000 | $3 – $6 |
| Germany | $60,000 – $80,000 | $30 – $40 |
| Japan | $50,000 – $70,000 | $25 – $35 |
2. Skills and specialized skills
There is no doubt that a developer’s years of experience facing challenging projects and solving highly complex problems are a determining factor in the hiring cost.
Developers with specialized skills have a higher value proposition:
- They have the knowledge and experience to solve complex technical challenges that might stump less experienced developers, saving you time and resources.
- Their expertise lets them work more quickly and efficiently, which leads to faster project completion times.
- Their specialized knowledge minimizes the chances of bugs or compatibility issues arising during the development process.
Additionally, it takes time and investment for developers to acquire specialized skills. They’ve likely invested in training, certifications. Developers with high-demand skills, such as machine learning or blockchain development, will also be more expensive.
For that reason, hiring a developer with specialized skills can save you money on training costs. Because you won’t need to invest significant resources to bring them up to speed on the specific technologies or frameworks needed for your project.
3. Project complexity and duration
Typically, developers on project-based contracts charge a higher hourly rate.
This is because they need to factor in periods between projects where they might not have steady income. Also, they might have to pay for their own health insurance, which is not provided by their full-time employer.
When you hire a remote developer as a full-time employee, you typically pay a fixed salary and cover benefits. This can be a more cost-effective option.
However, it requires a larger upfront commitment and can be less flexible if your project needs change.
How difficult a project is depends on the company’s resources, abilities, and outside factors. But there are simple and complex projects.
- For basic projects with well-defined requirements, you can likely hire a less experienced developer with a lower hourly rate.
- For intricate projects with evolving requirements or cutting-edge technologies, you’ll need a more experienced developer with specialized skills.
Their higher expertise comes at a premium rate, but it ensures they can navigate complexities and deliver a successful outcome.
Let’s look at a real-life example:
| Project Type | Complexity | Required Expertise | Key Technologies | Timeline | Approx. Cost Range |
|---|---|---|---|---|---|
| Basic Website | Low | Junior front-end developers | HTML, CSS, basic JavaScript | 2-4 weeks | $1,500 – $5,000 |
| MVP (Minimum Viable Product) | Medium | Mid-level full-stack developers | Front-end frameworks, basic back-end, simple database | 1-3 months | $15,000 – $30,000 |
| Advanced Web Application | High | Senior full-stack developers | Full-stack frameworks, advanced back-end, complex database, APIs | 3-6 months | $30,000 – $100,000 |
| Enterprise E-commerce Platform | Very High | Senior specialists (full-stack, DevOps, security) | E-commerce platforms, payment gateways, complex integrations | 6-12 months | $100,000 – $250,000 |
| Mobile App (iOS or Android) | High | Senior mobile developers | Swift/Kotlin, REST APIs, mobile-specific features | 3-6 months | $60,000 – $150,000 |
| Complex SaaS Platform | Very High | Senior full-stack team, specialists | Cloud infrastructure, scalability, advanced security, analytics | 6-18 months | $150,000 – $500,000+ |
Remember that these are rough estimates. Actual costs can vary significantly based on specific project requirements, team composition, geographic location, and unforeseen complexities that may arise during software development.
4 Infrastructure requirements
Are there any additional expenses or challenges related to managing remote developers that could impact overall costs?
In most cases, infrastructure requirements wouldn’t be directly included in the cost of hiring a software engineer. The engineer’s fee typically covers their time and expertise, not the cost of the tools they use or need.
It’s necessary to provide them with licensed software and development tools that will depend on the specific project requirements.
If a project requires specific software or hardware the developer doesn’t already have, purchasing or setting up that infrastructure can add unexpected costs to the project.
This can lead to “scope creep,” where the project goes beyond the initial agreement and requires additional budget allocation.
Comparing Developer Hiring Models: Freelance vs. Outsourcing vs In-House vs. Remote
Small projects don’t need full teams to get done. In these cases, sometimes, a single developer is enough. In other cases, you’ll want two specialists: one for the back-end/programming side and another for the front-end/design. The commonality in these cases is that these developers can work on their own for the most part.
Remote Developers
Remote developers are full-time employees who work for your company from a location outside of your physical office.
Why Hire Remote Developers?
- Access to global talent: You can tap into a vast pool of talented developers from all over the world, increasing your chances of finding someone with the exact skill set and experience you need for your project.
- Diverse perspectives: A remote team contributes to diversity of thought and approach. Developers with diverse backgrounds can bring their perspectives and experiences to the conversation, resulting in more innovative ideas.
The Benefits of Remote Developers
Remote developers offer several advantages beyond cost savings:
- Improved productivity: The State of Remote Engineering Report (2022) mentions that 65% of developers said they can get more meaningful work done while working remotely or from home, compared to 32% who said they are more productive working from an office.
- Scalability: You can bring on additional developers for specific projects or adjust your team size based on workload fluctuations.
- Work-life balance: Remote work arrangements offer flexibility for both your company and the developers. They can work during hours that best suit their schedule and location, potentially leading to a more satisfied and engaged workforce.
- Faster time-to-market: You might be able to complete projects faster and get your product or service to market quicker.
- Hire for quality, save on cost: Hiring for quality and affordability go hand in hand. Hiring experienced senior developers from regions with lower living costs ensures you get better talent than what you would get locally at about half the budget.
According to IWG, 64% of recruiters share that offering remote work policies allows them to hire more quality talent.
Cost Factors of Hiring Remote Full-Time Developers
- Recruitment Costs: Job postings, recruitment agency fees, and interview processes
- Communication Tools: Subscriptions for communication and collaboration tools (e.g., Zoom, Slack).
In-House Developers
In-house developers are full-time employees who work directly for your company, typically from your office location.
Why Hire In-House Developers?
- Direct control: You have more control over the work environment, schedule, and development process.
- Team integration: In-house developers can more easily integrate with your existing team and company culture.
The Benefits of In-House Developers
- Immediate communication: Face-to-face interactions can lead to quicker problem-solving and idea generation.
- Long-term investment: In-house developers are more likely to stay with the company long-term, building institutional knowledge.
- Security: Sensitive information and intellectual property may be more secure when kept in-house.
The Cost Factors of Hiring In-House Software Developers
- Benefits: Health insurance, retirement plans, paid time off, and other employee benefits.
- Equipment and Supplies: Computers, software licenses, office supplies, and other necessary equipment.
- Recruitment Costs: Expenses related to job postings, recruitment agency fees, and interview processes.
- Compliance and Legal Costs: Ensuring adherence to labor laws, tax regulations, and other legal requirements.
Freelancers
Freelancers are independent contractors that businesses can hire for a certain amount of time to integrate or develop a project.
Why Hire Freelancers?
- Lower costs: The costs for a freelancer will highly depend on their location. Freelance software developer rates will usually be higher than an in-house software developer’s salary, but the business will usually save money on legal fees and other benefits that in-house workers require.
- Flexibility: Hiring a freelancer tends to be a temporary arrangement that ends with a project or a specific time frame. You can hire niche talent on a project-by-project basis if you know that you’ll only need that particular skill set.
The Costs of Freelance Developers
Freelancers’ costs tend to be fairly straightforward since their operating costs are usually included in their rates. However, there are other small costs to consider:
- Integration and Onboarding: Extra time and resources needed to integrate freelancers into ongoing projects and team processes.
- Turnover and Continuity: Costs related to frequent turnover and the need for continuous onboarding and training.
- Unreliability and Unavailability: Potential delays and increased project costs due to inconsistent availability and reliability as freelance software developers tend to work on multiple projects at once.
The hourly rate of freelance developers can vary significantly based on their location and skills:
| Geographical Location | Average Hourly Rate |
| United States | $70 / hour |
| Australia and New Zealand | $70 / hour |
| Canada | $65 / hour |
| Middle East | $64 / hour |
| Western Europe | $63 / hour |
| Eastern Europe | $56 / hour |
| Sub-Saharan Africa | $55 / hour |
| Latin America | $51 / hour |
| Asia | $49 / hour |
| Former Soviet Union | $49 / hour |
| Northern Africa | $41 / hour |
(Values according to Codementor)
Outsourcing
Outsourcing involves contracting work to an external company or agency that provides development services.
Why Choose Outsourcing?
- Cost-effective: Outsourcing can be more cost-effective than maintaining an in-house team, especially for short-term projects.
- Expertise on demand: You can access specialized skills and technologies without having to train in-house staff.
The Benefits of Outsourcing
- Focus on core business: Outsourcing allows your company to focus on its core competencies while leaving the development work to experts.
- Scalability: Outsourcing companies can often quickly scale up or down based on your project needs.
- Reduced overhead: You don’t need to worry about office space, equipment, or other overhead costs for the development team.
The Costs Of Outsourcing
Outsourcing has very few operational costs outside of the values agreed upon in contract at the start of the project. However, there are a few things to consider:
- Legal Fees: When negotiating the outline of the project, it will be important for the contract to be specific and agreed upon by both parties. For that to happen, you’ll have to rely on lawyers on your end to help you write and review said contract.
- Management: You’ll need someone to oversee the project and be the bridge between your business and the development house. This can translate into extra costs for your business.
- Contract Renegotiation: If your project changes priorities or defines new features to be implemented mid-development, be prepared to incur heavy costs. These can be established in the contract or defined at the moment the new parameters are set.
Besides these costs, there are the obvious costs of the project’s development. These will usually be agreed upon at the time of writing the contract, and will depend on the development house’s reputation and the scale of the project:
| Project Scale | Hourly Rate | Minimum Budget |
| Small | $75 – $125 / hour | – |
| Medium | $200 – $300 / hour | $100,000 |
| Large | $250 – $850+ / hour | $500,000+ |
Each of these options – remote developers, in-house developers, freelancers, and outsourcing – has its own set of advantages and considerations. The best choice depends on your specific project needs, budget, timeline, and long-term business goals.
Hire For Quality, Save on Costs
The best way to save costs by hiring top-tier developers is by building a solid recruitment process. Or working with recruitment experts with all the strategies to headhunt the best developers in the industry.
If you want to hire a senior vetted software developer to be part of your current team, DistantJob’s IT recruiters can help you find the tech talent you’re looking for. No matter the size of the project or the budget available to you, we have a large array of people with different skill sets that are sure to fulfill your needs. We can find you the people best qualified to tackle your projects while making sure they are a good culture fit. Contact us!
