🔍 Read the full analysis: IT Staff Augmentation Vs Full-Time Hiring: Measure The Cost Difference on ThorstenMeyerAI.com
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TL;DR
A November 6 analysis by Thorsten Meyer calculates that a median-wage U.S. software developer costs an employer about $95 per hour actually worked before hiring costs, or about $98 with an assumed one-year hiring-cost allocation. The article says utilization can change the comparison sharply: at 50% utilization, its estimated break-even rate rises to about $197 an hour. These are calculations from public data, not a survey of staffing-provider rates.
Thorsten Meyer published a cost comparison on November 6 that estimates what employers pay for a full-time developer per hour actually worked and calculates the outside-specialist rate at which hiring would become cheaper. Using U.S. government wage and employer-cost data, the analysis puts a median-wage U.S. developer at about $95 per productive hour before recruiting costs, or roughly $98 per hour after allocating an assumed one-year hiring cost. The result is a repeatable calculation, not a finding that staff augmentation is always cheaper.
The U.S. estimate combines the Bureau of Labor Statistics’ $135,980 median annual wage for software developers in May 2025 with employer-cost data for the broader “management, professional, and related” occupational group. The BLS reported that group’s employer cost at $78.88 per hour worked in June 2026, including wages and benefits. Meyer uses the group’s benefit load and paid-leave figures to estimate annual employer cost and about 1,830 hours actually worked in a year. The resulting approximate cost is $95 per hour.
For Germany, the analysis cites Destatis figures showing €58.50 per hour worked in the information and communication sector in 2025. That is a sector-wide average covering IT and telecommunications jobs, not a developer-specific wage. Meyer says it includes holiday pay and employer social contributions. The two countries’ figures are therefore useful starting points, but they are not perfectly matched occupational comparisons.
Hiring costs add to the U.S. estimate. SHRM’s 2025 benchmarking survey reports an average $5,475 cost per non-executive hire, while the median was $1,200. Assuming the average cost is spread across one year of work, Meyer calculates an addition of about $3 per hour, bringing the estimated cost to around $98. The article says spreading that cost across three years would put the estimate near $96 per hour. These are calculations based on stated assumptions, not direct measurements of every employer’s costs.
Infographic 01 · The true cost of a hire
A salary is not the cost
Before you compare a hire with an outside specialist, convert both into the same unit: cost per hour of real work.
What a median US software developer costs the employer per hour actually worked. Our calculation from BLS wage and employer-cost data.
From salary to hourly cost
Calculation, each input published by the BLS
- Median salary, US software developer (May 2025)$135,980
- × 1.28 employer costs on top (benefits, insurance, retirement, payroll taxes)$174,600
- ÷ hours actually worked (2,080 paid, about 12% paid leave)1,830 h
- Cost per hour actually worked≈ $95
Sources: BLS Employer Costs for Employee Compensation, June 2026, Table 4 · BLS median wage, software developers, May 2025 · Destatis, 29 Apr 2026 · Destatis non-wage labour costs · SHRM 2025 benchmarking. Load factor = total compensation ÷ (wages + paid leave) = $78.88 ÷ $61.43. German sector figure covers all jobs in the sector, not only developers.
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Utilization Sets the Break-Even Rate
The central point is that a salary-based hourly estimate is not enough to decide between hiring and contracting. An employee’s cost continues even when there is not enough relevant work to fill their time. Meyer’s model says that at 50% utilization, the cost per useful hour doubles, pushing the estimated outside-specialist break-even rate from about $98 to about $197 an hour. That figure is model-dependent: it follows from the article’s assumptions and is not a quoted market rate.
For employers, this makes expected workload and duration central to the decision. A short, uncertain assignment or work requiring a specialist may fit an outside engagement, while a continuing role with steady demand may support a full-time hire. The comparison also leaves strategic considerations—such as continuity, access to expertise and retention of internal knowledge—to the employer rather than reducing them to hourly cost.
The article does not report a provider-rate survey and names no staffing firms. Meyer says published market-rate data with a clear methodology was unavailable for his comparison. Readers must compare the calculated threshold with actual quotes and their own employment costs.
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How the Cost Inputs Compare
The analysis draws on several sources that measure different things. The BLS’ June 2026 employer-cost figures cover a broad professional occupational group, while the software developer wage figure is a May 2025 occupation-specific median. Meyer applies the former group’s relationship between wages, benefits and paid leave to the latter wage. That produces an estimate, rather than a BLS-published hourly cost for a median software developer.
For Germany, Destatis reports €29 in non-wage labor costs per €100 of gross earnings in 2025. Its €58.50 hourly figure applies to the information and communication sector. The U.S. and German figures should not be read as a direct ranking: one combines a developer median wage with broader professional employer-cost data, and the other is a sector average across occupations.
The SHRM benchmark is also broad: it covers non-executive roles across participating organizations, not technology hires alone. Its average is much higher than its median, so choosing the average materially affects the example. Meyer presents the calculation as a framework readers can populate with their own compensation, utilization, hiring expenses and contractor quotes.
““Staff augmentation is cheaper than hiring.” You hear it in every pitch deck. Sometimes it is true. Often it is not.”
— Thorsten Meyer, ThorstenMeyerAI.com
Inputs Employers Must Supply
The calculation cannot establish which option is cheaper for a particular company without its actual contractor quote, expected utilization and employment costs. Meyer does not provide provider rates, saying rates vary and that he found no published survey with a clear methodology. The U.S. hourly estimate also applies data from a broad professional group to a developer wage, while the German figure is an IT and communications sector average.
Costs can also vary with location, seniority, benefits, paid leave, recruiting approach, assignment length and the work’s scope. The source does not quantify all of those factors or establish a universal threshold. It also says evidence about how much coding agents increase developer productivity remains unsettled; no productivity adjustment is built into the core comparison.
Apply the Model to Real Quotes
The next step for employers is to use the framework with their own numbers: estimate fully loaded employee cost, calculate hours likely to be spent on needed work, add recruiting expenses over the expected tenure, and compare the resulting cost per useful hour with current specialist quotes. The source does not announce a follow-up study, new rate survey or a further publication date.
Meyer also argues that AI changes some inputs without replacing the basic comparison. Coding agents may affect how much work a developer can complete, but the article says the size of that productivity effect remains uncertain. Employers assessing AI-related projects will still need to weigh short-term specialist needs against the value of retaining skills and project knowledge in-house.
Key Questions
What is the estimated cost of a median-wage U.S. developer?
Meyer calculates about $95 per hour actually worked using a May 2025 median wage and BLS employer-cost data. With an assumed one-year allocation of the average SHRM non-executive hiring cost, the estimate becomes about $98 per hour.
When does the analysis say staff augmentation may be cheaper?
The article says outside specialists may suit short, uncertain or specialist projects, particularly when a full-time employee would not have enough relevant work. The result depends on the quote and the employer’s actual costs.
How does utilization affect the break-even rate?
In Meyer’s example, 50% utilization raises the break-even rate from about $98 to about $197 per hour, because each useful hour carries a larger share of the employee’s cost. This is a model calculation, not a universal rate.
Can the U.S. and Germany figures be compared directly?
Not as like-for-like developer costs. The U.S. estimate combines a software developer median wage with employer-cost data for a broader professional group; Germany’s €58.50 figure is a sector average for information and communication jobs.
Does the article show that contractors are always cheaper?
No. Meyer says the result depends on utilization, project duration, hiring costs and actual specialist rates. The article provides a calculation method and does not publish a contractor-rate survey.
Source: ThorstenMeyerAI.com
