🔍 Read the full analysis: A Simple Way To Weigh IT Staff Augmentation Against Full-Time Hiring on ThorstenMeyerAI.com
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TL;DR
ThorstenMeyerAI.com published a calculation comparing the cost of a full-time developer with an outside specialist, using public US and German labor data. It estimates a US break-even rate of about $98 per hour when hiring costs are spread over one year, but says utilization and project duration can change the result substantially.
The calculation starts with the employer’s cost for a worker’s time, rather than salary alone. Meyer uses Bureau of Labor Statistics (BLS) data to estimate that a US software developer earning the May 2025 median wage of $135,980 costs an employer roughly $95 per hour actually worked. That is Meyer’s calculation, not a published BLS developer-cost figure.
For the calculation, the article applies a 1.28 labor-cost factor derived from BLS June 2026 data for the broad “management, professional, and related” occupational group. It also estimates about 1,830 hours worked per year, accounting for paid leave. Meyer then adds SHRM’s reported average $5,475 cost per non-executive hire from its 2025 benchmarking survey. Assuming a one-year tenure, that adds about $3 per working hour and brings the modeled cost to approximately $98 an hour. Spread across three years, the estimate is about $96.
The German comparison uses a different measure: Destatis reported an average employer cost of €58.50 per hour worked in the information and communication sector in 2025. Meyer cautions that this is an average across jobs in IT and telecommunications, not a developer-only figure, so it should not be treated as directly equivalent to the US occupational estimate. The article does not supply a German break-even rate including hiring 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 Can Change the Break-Even
The model’s main practical point is that a full-time employee’s cost per useful hour depends on how much work the employer has for them. If a hire is productively occupied for only half of available hours, the cost of each useful hour can roughly double. Meyer’s example says that at 50% utilization, the modeled break-even rate rises from about $98 to $197 an hour.
That makes the comparison relevant to teams weighing a defined, temporary specialist need against a continuing role. Augmentation may be a better fit for short, uncertain or specialized work, the article argues, while hiring may suit sustained core work where the employee remains busy and the organization needs to retain knowledge. Those are decision guidelines, not a finding that either option wins in every case.
The figure is a ceiling for comparing a quoted outside hourly rate with the modeled employee cost under the stated assumptions. A real decision may also depend on contract terms, onboarding, management time, continuity, security requirements and the value of knowledge retained in-house. The article’s arithmetic does not quantify all of those factors.
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How the Cost Model Was Built
Meyer says he used public figures and stated assumptions because he found no published agency-rate survey with a clear methodology. The article names no providers and does not offer market-rate estimates; readers are meant to apply the calculation to quotes they already have.
For the US baseline, BLS reported June 2026 employer costs of $78.88 per hour worked for the broad professional occupational group, including $54.06 in wages. Meyer compares that total with wages and paid leave to derive a roughly 28% additional-cost factor, then applies it to the median developer wage. SHRM’s $5,475 average hiring cost is for non-executive positions across roles, not technology hires specifically; its reported median was $1,200.
For Germany, Destatis reported €29 in non-wage labor costs for every €100 of gross earnings in 2025. Its €58.50 hourly figure covers the information and communication sector and includes holiday pay and employer social contributions. Different populations and methods mean the US and German numbers are starting points, not a like-for-like country ranking.
““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
Limits of the Published Estimates
The estimates do not establish what a particular company will pay. The US $95 and $98 figures depend on Meyer’s chosen wage, benefits factor, annual hours and one-year tenure assumption; the German figure is a sector average, not a developer-specific estimate. Actual compensation, benefits, hiring expenses and utilization vary by role and employer.
The article also does not provide the full calculation for every utilization level or a German break-even rate that includes recruitment costs. It says there are no market rates or provider comparisons because Meyer found no rate survey with a clear methodology. Readers therefore need their own staffing quotes and company-specific inputs before drawing a cost conclusion.
Meyer says evidence about how much coding agents increase developer productivity remains unsettled. The article presents AI as a factor that may create specialist project needs and increase the value of retaining internal knowledge, but it does not quantify either effect.
Apply the Formula to Real Quotes
The next step for a company using the method is to calculate its own employee cost per hour worked, add hiring expenses over the expected tenure, and estimate the share of working time that will be productively used. It can then compare that result with actual contractor or agency quotes, while accounting for non-price factors such as continuity and knowledge retention.
Meyer’s article does not announce a later data release or a market-wide survey. Its conclusion remains conditional: the calculation can guide a decision, but the outcome depends on local costs, the work’s duration and the organization’s staffing needs. The author also states that the material is not legal, tax or financial advice.
Key Questions
What break-even rate does the article estimate for a US developer?
Meyer estimates about $98 per hour actually worked after adding an average $5,475 non-executive hiring cost spread over one year. The estimate relies on stated assumptions and public data; it is not a vendor-rate benchmark.
Why does utilization affect the comparison?
When an employee has less work to do, the employer’s cost is spread across fewer productive hours. Meyer’s example puts the modeled break-even rate at about $197 an hour at 50% utilization, compared with about $98 at full utilization under the one-year assumption.
What is the German cost figure?
Destatis reported an average employer cost of €58.50 per hour worked in Germany’s information and communication sector in 2025. It covers multiple types of jobs, not developers alone, and Meyer does not provide a German break-even rate including hiring costs.
Does the article say augmentation is always cheaper?
No. It says the result varies with the outside specialist’s rate, project duration, hiring expenses and how fully an employee would be used. Meyer presents augmentation as potentially useful for short or specialized work and hiring as potentially preferable for sustained core work.
Source: ThorstenMeyerAI.com
