{"id":1068,"date":"2021-01-15T13:00:00","date_gmt":"2021-01-15T11:00:00","guid":{"rendered":"https:\/\/arc.dev\/employer-blog\/?p=1068"},"modified":"2025-06-10T16:27:43","modified_gmt":"2025-06-10T08:27:43","slug":"software-developer-freelance-vs-full-time-costs","status":"publish","type":"post","link":"https:\/\/arc.dev\/employer-blog\/software-developer-freelance-vs-full-time-costs\/","title":{"rendered":"How Much to Hire a Software Developer: Freelance vs Full-Time Costs"},"content":{"rendered":"\n

As the \u201cgig economy\u201d continues to flourish, hiring managers are presented with alternative ways to hire talents for their businesses. According to Intuit\u2019s<\/a> forecast, the on-demand economy will reach 43% by 2020. Many companies are already taking advantage of the gig economy.<\/p>\n\n\n\n

We understand that hiring software developers is not an easy matter. What is the company vision? What are the priorities on hand? What is the hiring budget range? These are some of the basic questions hiring managers must consider.<\/p>\n\n\n\n

Should you hire full-time employees or freelance developers? We aim to provide some helpful insight to answer that question.<\/p>\n\n\n\n

Though there are many ways to approach the subject, we will focus purely on the costs<\/strong> of hiring full-time employees and freelance developers.<\/p>\n\n\n\n

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Annual Salary Comparison<\/h2>\n\n\n\n

Method of Comparison<\/h3>\n\n\n\n

When it comes to hiring full-time employees, their salaries are usually calculated on an annual basis. Most of the time, companies will not hire freelancers all year round. One of the benefits of hiring freelancers is to hire them whenever you need them \u2014 this means most freelance hires will likely be short-term engagements. <\/p>\n\n\n\n

Though unlikely, we will calculate the annual salary of both full-time employees and freelance developers for comparison’s sake. We will use this equation to formulate their annual salary:<\/p>\n\n\n\n

Freelance hourly rate x average hour (1790 hrs) = Annual Salary<\/pre>\n\n\n\n
Note<\/strong>: According to the Organization for Economic Co-operation and Development<\/a>, the average annual hours actually worked per worker in the United States is 1,790 hours in 2015.<\/p>\n\n\n\n
Annual Salary for Full-Time Software Developers:<\/h3>\n\n\n\n
Software developers\u2019 annual salary varies depending on their working experiences. The following data from PayScale<\/a> applies to software developers with 5 years of experience.<\/p>\n\n\n\n
\"how<\/figure><\/div>\n\n\n\n
PayScale shows the range of annual salaries, excluding outliers, for software developers with 5 years of experience. We will focus on the median annual salary for software developers: $112,921<\/strong>. Next, let\u2019s look at freelance developers\u2019 annual salaries.<\/p>\n\n\n\n
Read More<\/strong>: What a Freelance Developer Contract Should Include (w\/ Templates)<\/a><\/p>\n\n\n\n
Annual Salary for Freelance Developers:<\/h3>\n\n\n\n
The cost of hiring freelance developers varies significantly from one country to the other. The range of hiring freelancers in North America goes from $50 to $250. The range is significantly lower in Eastern Europe and in India (see below):<\/p>\n\n\n\n
\"cost<\/figure><\/div>\n\n\n\n
Since there is a wide range of hourly rates for freelance developers, we will use real data from Arc for more accurate analyses of the rates for vetted freelance developers. If you were to hire quality freelancers from Arc, you\u2019d find that most freelancers charge somewhere between $60-$100 per hour<\/strong>. Therefore, we will use $60-$100 per hour for our analysis.<\/p>\n\n\n\n
Let\u2019s perform a similar calculation to find out the median annual salary of these freelance developers:<\/p>\n\n\n\n
Freelance hourly rate x average hour (1790 hrs) = Annual Salary<\/pre>\n\n\n\n
\"freelance<\/figure><\/div>\n\n\n\n
Annual Salary Comparison:<\/h3>\n\n\n\n
The annual salary for hiring freelancers at an hourly rate of $60 – $100 will result in $107,400 – $179,000. Is it cheaper to hire freelancers or full-time software developers?<\/p>\n\n\n\n
Hiring freelancers can be quite straightforward; however, hiring full-time employees come with a lot of other costs.<\/p>\n\n\n\n
Let\u2019s look at some in-house costs that we haven\u2019t included yet.<\/p>\n\n\n\n
Read More<\/strong>: 14 Toptal Alternatives to Hire Freelance Software Developers & More<\/a><\/p>\n\n\n\n
Other Costs of Hiring Full-Time Employees<\/h2>\n\n\n\n
Company-Paid Benefits<\/h3>\n\n\n\n
Lots of startups, companies, and businesses are offering special benefits such as unlimited paid leave, unlimited coffee, free gym memberships, and much more to attract top talents. These are all costs that should be factored into hiring full-time developers. First, let\u2019s take a look at some of the most basic company-paid benefits according to the Bureau of Labor Statistics<\/a>:<\/p>\n\n\n\n