Software agency vs hiring in-house a straight comparison
Most teams weighing this decision compare an agency's price to a developer's salary. That's the wrong comparison. The real question is the fully-loaded cost of a hire, the months before they're productive, and whether the workload is permanent. Here's an honest read of both, including the cases where hiring in-house is the right call.
Side by side
For a defined build. The picture changes for a permanent, full-time workload, covered further down.
The fully-loaded cost of a hire
Base salary is only 60–70% of what a senior engineer actually costs an employer. The rest is easy to forget when you're comparing to a project quote.
One senior engineer · illustrative, US market
- Base salary$140,000
- Employer payroll taxes+ $11,000
- Benefits, insurance, pension match+ $18,000
- Recruitment (≈20% of first-year salary)+ $28,000
- Equipment, software, stipend+ $6,000
- 2–3 months to full productivity+ $28,000
Figures are illustrative and vary by location and level. They exclude the cost of the engineering-manager time needed to hire and manage the role. UK and AU numbers land in a similar shape once employer NI / superannuation and recruiter fees are included.
A fixed-price project instead
- Scoped and quoted before you commit—
- Paid against milestones, not upfront—
- No recruitment, benefits, or ramp cost—
- Delivered in weeks to months, not a year—
- Full IP and code transfer on completion—
- You decide afterwards whether to hire—
We don't publish rate cards because scope drives everything. An MVP build runs 6–12 weeks; a full SaaS build 3–6 months. Get a rough range from the cost calculator before a call.
When hiring in-house is the right call
An honest comparison has to include this. If one of these is you, we'll say so on the call, and we can still help you get there.
The software is your core product
If you're a software company and the product is the whole business, you eventually need a permanent team that owns it. We can build v1 or the hard parts and hand over a clean codebase, but long-term the ownership should be yours.
You need someone in the building
Some work needs constant real-time collaboration with non-technical staff, deep immersion in a domain, or a regulated or confidential context where an external team doesn't fit. That's a hire, not a project.
You have engineering leadership to manage hires
In-house only works if someone senior can write the role, screen well, set standards, and manage people. Without that, a new hire underperforms and you don't find out for months. An agency brings its own management.
You have a steady, permanent roadmap
If there's genuinely full-time work for a developer for years, a salary is eventually cheaper than any agency rate. Agencies win for defined projects, workload spikes, and filling a gap fast, not for a decade of steady work.
The options between a project and a full hire
It isn't a binary. Three engagement models sit in the middle.
Fixed-price build, then hand over
We build the first version or the hard parts on a documented, standard codebase, then hand over the full repository and infrastructure. When the workload becomes permanent, your in-house hires inherit something they can run with. See MVP development.
Staff augmentation
Our senior engineers embed in your team, in your overlap hours, working to your standards on your roadmap. Minimum three months, no long-term employment commitment. See IT staff augmentation.
Dedicated development team
A full pod that owns a product area and grows with it, managed by us, aligned to your roadmap. A team without the hiring, HR, and retention overhead. See dedicated development team.
The short version
Use an agency when you have a defined project, need to move in weeks rather than months, want the cost bounded to a fixed price, or need to validate an idea before committing to headcount.
Hire in-house when the software is your core product with permanent full-time work, you have the engineering leadership to manage it, or the work genuinely needs someone in the building.
The common path is both, in sequence: an agency builds v1 or augments the team, then you hire in-house once the workload is permanent and you know exactly what you're hiring for. We hand over a clean codebase so that transition is straightforward.
Common questions
Is an agency really cheaper than hiring a developer?
For a defined project, almost always. A single senior engineer in the US or UK has a fully-loaded annual cost well above the base salary once you add employer taxes, benefits, recruitment fees, equipment, software, management time, and the two-to-three months before they are productive. A fixed-price project delivers a shipped, working product for a fraction of one engineer-year, and you decide afterwards whether the ongoing work justifies a hire. Where in-house wins is a permanent, full workload for years, where a salary eventually costs less than any agency rate.
What is the "fully-loaded cost" of a software hire?
Base salary is roughly 60 to 70 percent of the real cost. On top of it: employer payroll taxes and pension or 401(k) contributions, health insurance and other benefits, a one-time recruitment cost (often 15 to 25 percent of first-year salary for an agency placement), laptop and software licences, office or remote stipend, and the salary you pay during the two to four months before a new hire is contributing at full speed. A senior engineer on a 140k salary typically costs an employer 190k to 230k a year, before any engineering-management overhead.
How fast can an agency start compared to hiring?
Hiring a senior engineer realistically takes three to six months end to end: writing the role, sourcing, screening, interview loops, an offer, a notice period, and onboarding. An agency engagement starts in about two weeks, with people who have already shipped comparable products. If speed to a working product matters, that gap is the whole argument.
When should we hire in-house instead of using an agency?
Four situations. One: the software is your core product and will need a permanent team that owns it long-term. Two: the work needs someone physically in the building, in the same hours, deeply immersed in a domain or a regulated context. Three: you already have strong engineering leadership who can hire well, set standards, and manage people. Four: you have a steady, predictable roadmap with full-time work for a developer indefinitely, where a salary is eventually cheaper than any rate. We will tell you on the call if one of these applies to you.
Can an agency build something and then hand it to an in-house team?
Yes, and it is a common path. We build the first version or the hard parts on a documented, standard codebase with no lock-in, then hand over the full repository, architecture docs, and infrastructure. When you raise funding or the workload becomes permanent, your in-house hires inherit something they can run with rather than starting from scratch.
What about a bad hire versus a bad agency?
A wrong senior hire is usually six to twelve months lost: the ramp time, the period before you are sure, the exit, and re-hiring. A fixed-price engagement has a defined deliverable, milestone payments, and a clear end. If it is not working you stop at a milestone, and you still own everything built to that point. The downside is bounded in a way a salaried hire is not.
Do you offer something between a project and a full hire?
Yes. IT staff augmentation places our senior engineers inside your team, in your overlap hours, working to your standards on your roadmap, with a minimum of three months and no long-term employment commitment. A dedicated development team is a full pod that owns a product area. Both sit between a one-off project and building a permanent in-house team.
How do you keep quality high without being in our office?
Fixed-price scope agreed before we start, twice-weekly written updates, a working environment you can click through at any point, and code review and automated testing on every change. Most of our clients are in the US, UK, and Australia and have worked with us remotely for years. The i-mve platform has been in continuous development with us since 2022.
Tell us the project.
We'll tell you honestly which way to go.
30 minutes. If hiring in-house is the right call for you, we'll say so, and we can still help you build v1 or bridge the gap while you hire.