Should I hire a developer or an agency (or an AI consultant)?
Hire an in-house developer when you have at least a full-time job's worth of software work for years ahead, and someone who can manage a technical person. Otherwise, buy the work. An agency suits a defined project, an AI consultant suits deciding what to do, and a monthly plan suits several tools built and looked after.
| In-house developer | AI consultant | Automation agency | Forge monthly plan | |
|---|---|---|---|---|
| Typical cost, US | About $117,800 a year fully loaded at the lower end of pay; about $194,300 at the median | $75-150 an hour freelance; $125-250 boutique | $10,000-75,000 a project; retainers $1,000-3,500 a month for small businesses | $2,000 / $3,500 / $7,500 a month, first build included |
| Typical cost, UK | About £40,550 a year for a junior; about £81,850 for a senior (salary + employer NI + pension) | Median AI consultant contract day rate £564 | Usually quoted per project | £1,600 / £2,800 / £6,000 a month |
| Speed to start | Months to recruit, then time to learn your business | Days to weeks | Weeks of scoping | Two-week ops audit, first build live in 2-6 weeks |
| Who maintains it | Your developer, while they stay | Nobody - you get advice | You, unless you buy support | We do, on the plan |
| Best for | Firms with years of full-time software work and a technical manager | Deciding where to start | One defined automation project | Several tools built, rolled out and looked after |
| Worst for | Firms with part-time needs or no one to manage a developer | Firms that need things built | Ongoing, shifting work | Firms with enough work to keep a full-time developer busy |
Sources and arithmetic for the hiring costs are below. Consultant rates are typical, compiled from published rate guides (Layer3 Labs, September 2026; IT Jobs Watch, October 2026). Agency ranges are typical, from Codewave, August 2026. Our prices are from our pricing page.
What a developer really costs to employ
Salary is only part of it. Here is the fully loaded cost, with the sums shown.
United States The median annual wage for software developers was $135,980 in May 2025, and the lowest 10% earned less than $82,460 (US Bureau of Labor Statistics, October 2026). We use the lower figure as a stand-in for a junior hire and the median for an experienced one. On top of wages, benefits made up 30.0% of total compensation for private industry workers in June 2026, with wages the other 70.0% (US Bureau of Labor Statistics, October 2026). So total cost is roughly wages divided by 0.70:
- Junior: $82,460 / 0.70 = about $117,800 a year
- Experienced (median): $135,980 / 0.70 = about $194,300 a year
United Kingdom The median salary advertised for junior developer jobs was £35,000, and for senior developer jobs £70,000, in the six months to October 2026 (IT Jobs Watch, October 2026; IT Jobs Watch, October 2026). Employers pay National Insurance at 15% on earnings above £5,000 a year (GOV.UK, October 2026), and at least 3% into a workplace pension (GOV.UK, October 2026). We apply the 3% to the whole salary to keep it simple; the legal minimum applies to a band of earnings, so the real figure can be a little lower.
- Junior: £35,000 + NI (15% x £30,000 = £4,500) + pension (3% x £35,000 = £1,050) = about £40,550 a year
- Senior: £70,000 + NI (15% x £65,000 = £9,750) + pension (3% x £70,000 = £2,100) = about £81,850 a year
These totals leave out recruiting fees, equipment, software licences, training and the time it takes a new person to learn your business. They are a floor, not a ceiling.
The costs that do not show up on payslips
Management
A developer needs someone to set priorities, review work and decide what "done" means. In a 20-person people business - a business that sells its people's expertise and time, such as an agency, accountant, law firm or consultancy - there is usually nobody technical to do that. It falls to the owner or ops lead, who then spends hours a week managing work they cannot judge.
The bus factor
This is how many people would need to leave before nobody knows how your tools work. With one in-house developer, it is one. If they leave, get ill or take a long holiday, your tools are unwatched. Hiring two fixes that, at double the cost.
Loneliness
A single developer in a non-technical firm has no one to learn from or check their work. Good developers often leave for teams where they do, which brings you back to recruiting.
Uneven work
Software needs in a small firm come in bursts. A big build, then months of small fixes. Full-time salaries do not flex with that.
Adoption
Whoever builds the tools, someone has to roll them out: show the team, train them, and listen when something does not fit. An in-house developer can do that well if they have the time and the people skills; it is easy to forget when budgeting.
None of these mean hiring is wrong. They mean the decision is about more than the salary.
When hiring in-house is right
Hire your own developer if most of these are true:
You have a full-time job's worth of work
for at least two or three years, not just one big project.
Software is core to what you sell,
or is about to be. You are building a product, not just connecting tools.
You have, or will hire, someone who can manage a technical person
a CTO, a technical co-founder, or a senior developer as the first hire.
You can afford two
eventually, so one person leaving does not stop everything.
You want the knowledge inside the firm
for strategic reasons, and you are willing to pay for that.
If those are true, an in-house developer is usually better value than any outside option over time. We would tell you to hire one.
Pick an in-house developer if...
- The workload is steady and full-time, for years.
- Someone can manage them.
- You are building something you sell.
Pick an AI consultant if...
- You do not yet know what to build, and the decisions are big or risky.
- You want advice, and have people to implement it afterwards.
- See our AI consultant for small business page for how a short audit can cover this for smaller firms.
Pick an automation agency if...
- You have one defined automation project, with a clear scope.
- Someone on your team can own the result afterwards.
- You are happy to pay for changes and support as they come.
Our AI automation agency pricing guide covers what agencies charge in more detail.
Pick a Forge monthly plan if...
- You have several pieces of manual work between apps, but not a full-time developer's worth.
- Nobody on your team can manage a developer.
- You want tools rolled out properly, with your team trained, and looked after when apps change.
We work in four steps: scope, build, roll out, improve. A two-week ops audit ($2,500 / £2,000) counts the hours your team loses and scopes your first three builds; it is credited to your first month. Monthly plans are $2,000, $3,500 or $7,500 (£1,600 / £2,800 / £6,000) with your first build included and a 3-month minimum. The software runs on your own accounts, so you own it, and nothing has to move if you later hire your own developer. In fact, that is a good path: start with us, prove the value, then hire when the work justifies a full-time person.
Our recommendation: how we'd decide for a 20-person firm
- Estimate the work honestly. List the tools and fixes you want this year. If you cannot imagine more than a few months of full-time work, do not hire full-time.
- Ask who would manage the hire. If the answer is "me, somehow", and you are not technical, that is a warning sign.
- Compare like with like. A junior UK developer at about £40,550 a year fully loaded is roughly £3,380 a month. Our middle plan is £2,800 a month. A US junior at about $117,800 is roughly $9,800 a month, against our $3,500 plan. The plan includes looking after the tools; the hire includes being in the building and knowing the firm deeply. Both are real advantages.
- Think about the bus factor. One person is a single point of failure. If your tools touch clients, plan for that.
- If the work is growing fast, plan to hire. A monthly plan can cover the first year while you find out how much work there really is.
Honest version: if your firm has a steady stream of software work and a technical leader, hire. If you have a list of fixes and nobody to manage a developer, buy the work.
Worked example: timesheet software, hired or bought
Take one real job: timesheet software, time logged against the right client and the right stage, so you can see what each client really costs. Our custom software cost guide puts the typical market cost of a dashboard or internal tool like this at $8,000-18,000 in the US or £6,000-14,000 in the UK, taking 2-6 weeks (typical, compiled from published rate guides). At Fame, the team logs time against the episode and stage they are working on, and the founder can see which clients earn their margin without building a spreadsheet.
With an in-house developer
Building it is a good use of a few weeks of their time. The real cost is the year around it: a UK junior at about £40,550 or a US junior at about $117,800 fully loaded. Worth it only if there is plenty more to build afterwards.
With an AI consultant
They could help decide whether to build or buy time tracking, and which data matters for margin. You would still need someone to build it.
With an automation agency
Expect a quote in the $8,000-18,000 (£6,000-14,000) range, built in 2-6 weeks. Support afterwards is extra.
With Forge
The ops audit is credited to month one, and the timesheet is your first build, included. On the $2,000 / £1,600 plan, the 3-month minimum is $6,000 / £4,800 in total, including rollout so the team actually logs their time, and we look after it after that. If off-the-shelf time tracking fits how you work, buy that instead; it is cheaper than any of these.
Across all of Fame's tools, the team got back 5,460 hours as of 14 October 2026.
Questions, answered plainly
Should I hire a developer in-house or work with an agency?
Hire in-house if you have years of full-time software work and someone to manage a developer. Work with an agency for a defined project. If you have several smaller tools to build and look after, a monthly plan sits between the two.
How much does it cost to hire a developer?
In the US, roughly $117,800 a year fully loaded at the lower end of pay and $194,300 at the median, using BLS wage and benefit data. In the UK, about £40,550 for a junior and £81,850 for a senior, including employer NI and pension.
Is it cheaper to hire a freelancer or an agency?
For a single small job, a freelancer is usually cheaper. Agencies cost more but bring a team, which suits bigger projects. Either way, ask who will look after the work once it is finished.
What are the disadvantages of an in-house developer for a small business?
Management overhead, a bus factor of one, uneven workload, and the time it takes to recruit and learn the business. They matter most when nobody in the firm is technical.
Benefits of being an in-house dev vs agency dev?
For the business, an in-house developer knows your firm deeply, is always available and keeps knowledge inside. An agency developer brings a team, wider experience and cover when someone is away.