🔍 Read the full analysis: IT Staff Augmentation Vs Full-Time Hiring: Find Your Cost Threshold 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, or roughly $98 after an estimated one-year hiring cost. The comparison changes sharply with utilization: at 50% utilization, the article’s model puts the break-even outside rate near $197 an hour. These are calculations from public data and stated assumptions, not market-rate quotes.
Thorsten Meyer published a cost comparison on November 6 estimating when hiring a full-time developer may be cheaper than using an outside specialist. His calculation puts a median-wage U.S. developer at about $95 per hour actually worked, rising to roughly $98 after an estimated one-year hiring cost; the threshold can rise substantially when the employee would not have enough work to stay fully utilized.
The U.S. estimate starts with a Bureau of Labor Statistics median software developer wage of $135,980 a year, reported for May 2025. Meyer applies a benefits and paid-leave factor drawn from BLS employer-cost data, then divides the resulting annual employer cost—about $175,000—by an estimated 1,830 hours actually worked in a year. The $95 hourly figure is Meyer’s calculation, not a published BLS developer cost-per-hour statistic.
Meyer adds $5,475 for hiring, citing SHRM’s 2025 average cost per hire for non-executive roles. Assuming a one-year stay, the article estimates that this contributes about $3 per hour worked, bringing the modeled cost to roughly $98 an hour. SHRM’s figure covers roles across occupations, not just technology jobs; its reported median was $1,200, reflecting a distribution in which some costly hires raise the average.
For Germany, the article cites Destatis data showing an average employer cost of €58.50 per hour worked in the information and communication sector in 2025. That is a sector-wide figure across IT and telecommunications jobs, rather than a developer-only estimate. Meyer says the figures are useful starting points, but they are not direct like-for-like salary comparisons.
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 main decision point is not simply salary versus an agency invoice: it is how many hours of useful work the employer has for the employee. If a full-time hire is needed throughout the year, a lower outside hourly rate may still be the more expensive choice once benefits and hiring costs are included. But unused capacity raises the cost of each productive hour.
Meyer’s example puts the break-even outside rate at about $98 an hour when the hire is fully utilized. At 50% utilization, the modeled threshold rises to about $197 an hour, because the same employment cost is spread across half as many useful hours. That is a scenario calculation, not a universal rate: employers need to substitute their own salary, costs, project duration and expected utilization.
The comparison can help organizations evaluate short, uncertain or specialist assignments against permanent hiring. It also leaves room for factors the arithmetic cannot settle, including continuity, access to skills, retention of institutional knowledge and the management effort involved in onboarding outside workers.
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How the Cost Model Was Built
The article uses publicly available figures rather than vendor price lists. Meyer says he did not find a published staff-augmentation rate survey with a sufficiently clear method, and excludes provider names and market-rate claims. The intended use is to compare the calculation with actual quotes received by an employer, rather than treat the article’s figures as a price guide.
For the United States, BLS employer-cost figures for June 2026 show that employers in private industry paid an average of $46.89 per hour worked, including wages and benefits. For the broader management, professional and related group, the reported total was $78.88 per hour worked. Meyer uses the relationship between wages, paid leave and other benefits to estimate an employer-cost factor for the developer calculation. The developer wage input, however, is from May 2025.
For Germany, Destatis reports non-wage labor costs of €29 for every €100 of gross earnings in 2025. Its €58.50 hourly figure applies to the information and communication sector and includes holiday pay and employer social contributions. Different populations and methods mean the U.S. and German figures should not be read as a direct country ranking.
“A salary is not the cost.”
— Thorsten Meyer, in the November 6, 2026 article
Inputs Employers Must Supply
The break-even figures depend on assumptions rather than a single rate that applies to every employer. Meyer’s roughly $98 estimate assumes a one-year employment period and uses an average hiring-cost figure across non-executive roles. Actual salary, benefits, recruiting expenses, retention, location and time needed for onboarding can differ.
The supplied article excerpt ends as it introduces the utilization calculation, so it does not set out every scenario or assumption behind the stated 50% example. It is also unclear what outside hourly rate a particular employer would be quoted: Meyer says agency rates vary and does not provide market-rate estimates. The German sector average cannot establish the cost of hiring a specific software developer.
The article also says evidence about how much coding agents increase developer speed remains unsettled. It does not provide a quantified AI productivity adjustment, so readers should not treat its hourly thresholds as AI-adjusted figures.
Apply the Model to Actual Quotes
The next step for employers is to replace the article’s benchmark inputs with their own numbers: total compensation and employer costs, expected hours of productive work, hiring expenses, expected tenure and the duration of the project. They can then compare the resulting cost per useful hour with written staff-augmentation quotes and account separately for continuity and knowledge-retention needs.
Meyer’s article does not announce a new survey or a follow-up release. The comparison is presented as a repeatable calculation using public data and employer-specific inputs. Any changes in wage, benefit, hiring-cost or AI-productivity evidence would alter the assumptions, but no revised estimate is provided here.
Key Questions
What break-even rate does the article estimate for a U.S. developer?
Meyer estimates about $95 per hour actually worked before hiring costs, and roughly $98 an hour after adding an assumed one-year share of the SHRM average hiring cost. These are modeled estimates, not market quotes.
Why does utilization change the comparison?
A full-time hire’s employer cost continues even when the employee has no assigned work. If only half of the available time is useful, that cost is spread over fewer productive hours; Meyer’s stated 50% scenario puts the break-even outside rate near $197 an hour.
Can the U.S. and German figures be compared directly?
Not as equivalent developer salary benchmarks. The U.S. estimate uses a median wage for software developers, while Germany’s €58.50 per hour figure is an average for the broader information and communication sector.
Does the calculation show that staff augmentation is always cheaper?
No. It describes a threshold based on specified inputs. Short or uncertain specialist work may favor outside staffing, while sustained work and the need to retain internal knowledge may favor hiring; employers need their own costs and quotes to judge the case.
Does the model account for AI coding tools?
Not with a quantified productivity adjustment. Meyer says evidence on how much coding agents speed up developers remains unsettled, and treats AI as a reason to reassess project needs and knowledge ownership rather than as a fixed change to the hourly calculation.
Source: ThorstenMeyerAI.com
