The number of hired software developers and QA engineers is expected to increase 25% by 2032 within the USA, according to the Bureau of Labor Statistics estimates. It is related to the stable demand for so-called “traditional” programmers, like specialists in business automation and web development, and the growing demand for AI- and IoT-related software.

Whether you're a startup, a mid-sized enterprise, or a large corporation, you might be considering the question “How much does it cost to hire a software developer?”. Want to have a roadmap which can help you weigh all the aspects and achieve better price/quality? We will explore all the factors that contribute to the cost of hiring a software developer.

Correlation Between Types of Developers / Projects and Compensations

Each category of software developer brings its unique expertise, which can overlap or not overlap with others. The balanced (and cost-effective) tech team has all the project requirements covered evenly. Simply put, make sure there are no skill gaps, but avoid overloading certain areas of responsibility with extra qualities and hands.

We’ve prepared some examples of how a programmer type impacts the programmer cost so that you can focus on building your balanced team.

⚙️ Back-End vs. Front-End vs. Full-Stack: How to Invest into Competitive Features?

A tech company needs to hire Back-end Developers if the project needs server-side development, dealing with databases, server logic, and API integrations. Yet, hiring a Front-end Developer would be up to the point if you need to improve the user interface and the overall user experience. They work with HTML, CSS, and JavaScript to create the visual aspects of a website or application.

The decision to hire Full-stack Developers can bring numerous advantages if you have limited resources or a small team. Having a front-end and back-end development stack in one person, you pay one compensation instead of two and get a seamless development process, which especially helps in situations where tasks require close collaboration between front-end and back-end components. Larger, more complex and scalable projects may benefit from specialized roles, allowing each developer to utilize their in-depth expertise.

⚙️ Web Developers vs. Software Developers: Whom to Hire to Decrease Programmer Cost?

Web development concentrates on crafting web-centric applications like websites and web applications. Software development covers tasks related to building desktop, mobile, and other types of apps. That’s why the expenditure associated with hiring a developer who works only with web-based software products and services might be less. Double-check your project requirements to see if web developers suit your goals. If yes, you can save up to a third of the sum for software developer costs.

But be aware that exceptionally skilled and seasoned web developers may command rates akin to those of software developers, particularly for intricate web applications or projects entailing integration with other systems.

⚙️ Niche Specialists: What Are the Stats for Your Domain?

How much does it cost to hire a programmer for Fintech, Healthcare, or E-commerce, for instance? The answers would be pretty different. Finance apps are the most difficult due to their high-load nature. The initial investments are even higher if such apps serve Blockchain technology. Digitalizing medical services and creating marketplaces require a bit less effort, but they also need complex graphs and real-time processing and remain among the domains with the highest developer rates. Hence, if your projects come from those areas, you definitely need to study budget optimization techniques.

Cost of Hiring a Software Developer: 5 Components For All Project Types

There are 5 must-have components of developer costs. By combining them in the ratio relevant to your project and goals, you can get your unique smart budgeting recipe.

#1. Location

How much does it cost to hire a software developer outside your city or country? Did you ever think about that? For instance, hiring developers from the US or EU tends to be more expensive than hunting for talent within Eastern Europe or some Asian countries. Approximately 80% of the world's top 500 companies leverage offshore teams for their daily operations, highlighting the widespread adoption of this practice.

#2. Tech Stack and Expertise

Highly skilled developers with specialized knowledge and years of experience often command higher rates. Junior ones may have lower developer hourly rates, but they require more supervision and time to complete tasks compared to their more experienced counterparts. Even with tough budget constraints, pay more attention to the quality of work you expect and the desired time-to-market, as they are a base of your financial success.

#3. Project Complexity and Scope

The complexity and scope of your software development project are key determinants of the overall cost. A simple website development project will cost considerably less than building a complex enterprise-level application with advanced functionalities. Additionally, hard-to-implement design and poor project management practices can increase costs. To avoid wasting resources, it’s possible to remove not-so-important interface features and streamline communication, evaluating project milestones.

#4. Contract Type and Duration

A dedicated team and long-term contracts may offer cost savings compared to part-time specialists and short-term arrangements. Considering long-term partnerships with developers, businesses should check if the agreement is flexible enough to stay beneficial over time. In outsourcing contracts, you may face limits on changes which could be done within a project. With outstaffing, such a situation is impossible, as you agree on the fact that an outstaffing company provides you with team members, and you manage their tasks flexibly.

#5. Debugging and Support

In addition to the direct software development cost, there are often related costs that businesses may overlook, like investing in thorough testing. It’s better to allocate resources for QA measures to prevent costly errors and ensure the final product meets quality standards. As well as, budgeting for post-launch support and updates is essential to avoid surprises and ensure the continued functionality and security of your software.

How to Optimize Hiring Budgets?

How much does it cost to hire a developer if to think strategically? Like other business processes, software developer recruiting becomes financially successful when it is well-planned and data-driven. The choice is yours: to worry about figures, or stop worrying and conduct market research, prepare individual bonuses for future team members and expand your hiring geography.

Here are 3 more business tips to manage a software developer cost.

• Utilize open-source software components and libraries where possible. Thus, you can free up costs for top developers able to move your project to new heights.

• Negotiate compensations. The global talent battle is intense, and the expected compensations are pretty high. Nevertheless, you can be more flexible with the sums you offer if you’ve mastered negotiation techniques.

• Stay resilient. MAANG companies pay $180K for entry-level positions, yet they have been blamed for mass layoffs recently and not all the techies are ready to pass through their long selection process. Nobody is perfect. Your job offer can be competitive even with modest figures if you pay attention to the stable career path within your company, opportunity to work with in-demand technologies, and clear hiring stages including well-structured onboarding.

• Involve experts. Find experienced outstaffing partners and delegate developers recruitment to them. We are to dwell on this tip in detail, as it helps our clients, growing IT businesses, cover multiple cost-related hiring tasks.

Involving HR Experts: Results in the Long Run

Tech team scaling through an outstaffing model is a smart way to manage the 3 hows.

• How much does it cost to hire a programmer?
  Your People partner, for instance Outstaff Your Team, conducts a tailored market analysis for a vacant position in your team. As a result, they can launch a hiring campaign which hits the target and is aligned with your budget as much as possible.

• How much does it cost to retain a programmer?
  When partnering with Outstaff Your Team, you pay the flat monthly price and may sleep peacefully knowing that 1) all the hiring paperwork and payrolls are handled on time; 2) well-being checks were arranged to ensure your team members stay loyal to your company.

• How much does it cost to replace a programmer?
  On average, one programmer’s replacement costs nearly 2 additional compensations and more if the position remains opened for a long time. Outstaff Your Team’s goal is to hire a software programmer with matching hard and soft skills right from the start. To ensure we provide the best candidates for your positions, we scan the global talent pool and do professional background checks. With professional talent acquisition, replacement is not necessary in most cases.

Need help with determining software developer cost? Drop us a line, we’ll meet online and address all your questions.

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by Kateryna Balakyreva
on December 18, 2023. Share on LinkedIn Post on Twitter

Kateryna joined the IT industry 3 years ago. Reviewing B2B software and related frameworks, she concluded that the best-in-class programs need well-built teams and started to write about tech teams scaling. Her natural habit to improve texts and search for alternative visions comes from working at the publishing house in early youth.