Finding out how much it costs to hire a software developer for a startup can be a tricky process.
With various factors influencing developer salaries, understanding these can help you make the best choice for your needs.
Are you...
- Wondering how much to budget for hiring a software engineer?
- Debating between an in-house developer or outsourcing?
- Seeking clarity on the type of developer you need?
With so many options, knowing the average costs for different hiring models can give your startup a competitive edge.
This article is for:
- Startup founders planning their hiring budget
- Entrepreneurs building a tech product from scratch
- Small businesses exploring software development options
Hiring the right software developer for a startup can make or break the success of your project.
With countless options and price ranges, understanding the costs and selecting the ideal candidate can be challenging. Here, we break down the costs to help you make a smart, informed decision.
Table of Contents
- 3 Factors That Influence The Cost of Hiring A Software Developer
- Hiring Models For Startups: In-House, Freelancers, Or Outsourcing?
- Additional Costs To Consider When Hiring Developers In A Startup
- Planning Your Software Developer Hiring Budget
3 Factors That Influence The Cost of Hiring A Software Developer
Hiring a software developer involves more than just looking at salaries; various factors impact the cost, including location, developer experience, and the type of developer your startup needs.
Location & Regional Differences
The cost to hire a software developer varies considerably based on their location.
Developers in North America, especially in the US and Canada, tend to have higher average salaries compared to those in other regions.
For example, a mid-level developer in the US might earn $80,000-$120,000 per year, while the same developer in Eastern Europe could cost around $40,000-$60,000 annually.
Meanwhile, developers in Asia may charge even less, with costs ranging from $15,000 to $40,000 depending on experience.
Using platforms like Salary.com or Glassdoor can give you up-to-date insights into regional developer costs, helping you plan a cost-effective hire based on location.
Experience Level Of The Developer
The experience level of a developer also affects the cost to hire. Junior developers typically cost less and are ideal for projects that require less complex work, with starting salaries around $50,000 per year in North America.
Mid-level developers, with a few years of experience, might charge $80,000 or more, depending on their skillset and region.
Senior developers, who bring extensive experience and can tackle more challenging projects, may require annual salaries upwards of $120,000-$150,000.
Type Of Developer Needed
The type of software developer your startup requires will also impact cost. For example:
- Front-end developers (specialising in user interfaces) typically cost between $60,000-$90,000 per year.
- Back-end developers (handling server-side code) may charge slightly more, in the range of $70,000-$100,000.
- Full-stack developers, who cover both front-end and back-end, often charge premium rates, from $80,000 to $120,000 or higher.
- Mobile developers focused on Android or iOS development tend to fall in the $70,000-$110,000 range, while more niche roles, like data engineers or DevOps specialists, can push these costs higher.
Hiring Models For Startups: In-House, Freelancers, Or Outsourcing?
Choosing the right hiring model is crucial for startups to manage both quality and costs effectively.
Cost Of Hiring In-House Developers
Hiring an in-house developer provides full-time support but comes with extra expenses beyond salary. These include benefits, insurance, and possibly office space costs, which can increase the total cost by 20-30% over the base salary.
The average cost of hiring a full-time in-house developer ranges from $70,000 to $120,000 per year in North America, plus these added employment costs.
Cost Of Hiring Freelancers
Freelancers are ideal for short-term projects or tasks that don’t require a full-time developer. Freelancers often charge hourly rates, which can range from $20-$80 per hour depending on experience and location.
For a simple app development project, hiring a freelance programmer might cost you between $5,000 and $30,000, depending on complexity.
Freelance sites like Upwork or Fiverr make it easy to find freelance developers who can work within your budget. If you are looking for support in recruiting the best developer talent to join your team, Remote Crew turns hiring developers into a seamless process.
Cost Of Outsourcing Development
Outsourcing can offer cost savings, especially if you work with agencies in lower-cost regions. Outsourcing rates can vary widely, with offshore agencies charging between $20-$50 per hour and Western-based agencies typically charging $100-$200 per hour.
Outsourcing provides access to highly skilled teams, though it may come with communication and time zone challenges. When outsourcing, it’s essential to find a reputable agency to ensure quality and reliability.
Additional Costs To Consider When Hiring Developers In A Startup
Beyond base salaries or hourly rates, additional costs can arise when hiring developers for your startup.
Recruitment Fees & Onboarding Costs
Finding the right developer involves recruitment costs, particularly if you use an agency or platform. Recruitment agencies may charge anywhere from 10% to 20% of the developer’s first-year salary.
Onboarding costs, including training and setup, can add another $1,000 to $5,000 depending on the setup requirements.
Salary vs. Total Cost Of Employment
It’s essential to consider the total cost of employing a developer, not just their salary.
Benefits like health insurance, paid leave, and retirement contributions often increase the true cost of employment by 20-30%.
As a startup, budgeting for these extra expenses can prevent unpleasant surprises.
How To Optimise Hiring Costs For Startups
Reducing hiring costs doesn’t have to compromise quality.
Here are some practical tips to help you keep developer costs manageable:
Consider Nearshoring Or Offshoring
Hiring developers from nearby countries (nearshoring) or lower-cost regions (offshoring) can provide cost-effective solutions without sacrificing quality.
Choosing The Right Payment Structure
Opting for project-based payment instead of an hourly rate can sometimes result in cost savings, especially if your project scope is well-defined.
Hire A Recruitment Agency
A reputable recruitment agency can match you with skilled developers faster and may even save you money in the long run by reducing recruitment time and improving the quality of candidates.
Focus On MVP Development
Minimize costs by focusing on a minimum viable product (MVP) first. This allows you to develop a basic, functional version of your software before investing in additional features.
Planning Your Software Developer Hiring Budget
You don’t need to break the bank to hire a skilled developer, but careful planning is key to managing costs effectively. Here’s a quick recap of key points:
- Determine the type of developer you need to avoid overpaying.
- Consider location and how it impacts costs.
- Choose the best hiring model for your needs - in-house, freelancer, or outsourced.
- Account for hidden costs like benefits, recruitment fees, and onboarding.
- Optimize your budget by exploring nearshoring, project-based payments, or MVP development.
You can find the right software developer for your startup without overspending by keeping these tips in mind and choosing the right recruitment partner to spearhead your hiring efforts.
Find out more about how Remote Crew can help you hire remote developers in a competitive market.