🔍 Read the full analysis: Should You Augment IT Staff Or Hire Full-Time? Start With The Break-Even Rate on ThorstenMeyerAI.com
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TL;DR
An analysis published by Thorsten Meyer on November 6, 2026, offers a method for comparing full-time developer costs with an outside specialist’s hourly rate. Its calculations put a median US developer at about $95 per hour actually worked before hiring costs, and a German information-and-communication-sector average at €58.50. The break-even rate depends heavily on how much useful work the hire has and how long the role lasts.
Thorsten Meyer published a cost analysis on November 6 laying out how employers can compare a full-time developer’s cost with an outside specialist’s hourly quote. The analysis calculates a US median developer’s employer cost at about $95 per hour actually worked before hiring costs, then argues that the useful comparison is a break-even rate: the highest contractor rate that remains cheaper than hiring for a specific workload and time period.
The calculation draws on public data rather than agency price surveys. Meyer uses Bureau of Labor Statistics figures for employer costs and developer wages in the United States, Destatis figures for German labour costs, and a Society for Human Resource Management benchmark for hiring expenses. He says provider rates vary too widely, and that he found no published rate survey with a clear method, so readers should compare the result with quotes they obtain themselves.
For the US example, the BLS reported a median software developer wage of $135,980 in May 2025. Meyer applies an employer-cost adjustment based on BLS data and divides the resulting annual cost, about $175,000, by an estimated 1,830 hours actually worked. That produces an estimated $95 per productive hour. Adding SHRM’s 2025 average cost per hire of $5,475, under the assumption that the employee stays one year, raises the estimate to about $98 per hour worked.
The German figure is measured differently: Destatis reported that an hour worked in the information and communication sector cost employers €58.50 on average in 2025. That sector-wide figure includes jobs beyond software development, Meyer cautions. It should not be read as a developer-specific wage or direct like-for-like comparison with the US occupational median. The article also notes SHRM’s $1,200 median cost per hire, below its $5,475 average, because a small number of high-cost hires raise the average.
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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Workload Sets the Hiring Threshold
The comparison matters because an employee’s salary alone does not show the cost of getting work done. Employers also pay benefits and other non-wage costs, while paid leave means that not every paid hour is an hour worked. A contractor quote above an employee’s raw wage may still be below the employer’s cost per productive hour; conversely, a full-time hire can be cheaper when work is steady and fills most of the person’s capacity.
Utilisation is a central variable in Meyer’s method. If a business has real work for only half of a new hire’s available hours, the cost of each useful hour can roughly double. His example says the break-even rate rises from about $98 to $197 an hour at 50% utilisation. That is a calculation based on the stated cost assumptions, not a universal market rate. Teams need to supply their own expected workload, duration, pay, benefits and contractor quotes.
The result also frames the trade-off beyond price. Short, uncertain assignments or work requiring a narrow specialist skill may suit augmentation, while sustained core work may support a hire. Meyer also identifies knowledge retention as a reason businesses may prefer employees, even when an outside specialist looks cheaper on a narrow hourly comparison.
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The Inputs Behind the Estimate
For US private industry, the BLS reported June 2026 employer compensation costs of $46.89 per hour worked, including $32.82 in wages and $14.07 in benefits. For the broader management, professional and related occupational group, the reported total was $78.88 per hour worked. Meyer uses that group’s figures to estimate a 1.28 employer-cost factor against wages plus paid leave, and estimates about 1,830 hours worked from 2,080 paid hours in a year.
For Germany, Destatis reported €29 in non-wage labour costs per €100 of gross earnings in 2025. Its information and communication sector hourly cost rose from €49 in 2020 to €58.50 in 2025, according to the figures cited in the analysis. These measures include employer costs, but their populations and methods differ from the US software-developer median.
Meyer says hiring fees have a smaller effect in his one-year example than utilisation does: the $5,475 average hiring cost adds roughly $3 per hour across a year of work. He reports an estimate of about $96 per hour when spread across three years. Both figures depend on the assumed period and the use of SHRM’s average, which covers non-executive roles generally, not technology hires alone.
Where the Comparison Has Limits
The figures are estimates, not quoted prices or advice for a particular employer. The US wage figure is a national median for software developers, while the German hourly figure is an average across the information and communication sector. They cover different groups and should not be treated as directly equivalent benchmarks. The underlying datasets also refer to different periods: the wage figure is from May 2025, while the cited US employer-cost data are from June 2026.
The break-even result changes with employee pay, benefits, hiring costs, expected tenure, actual hours worked and workload utilisation. Meyer’s examples use stated assumptions; an employer’s result may differ. The analysis does not give current contractor or agency market rates, and it says no rate survey with a clear method was found. It also says the evidence on how much coding agents accelerate developers remains unsettled. Meyer describes the article as not legal, tax or financial advice.
Apply the Formula to Your Quotes
The analysis does not announce a new regulation, industry survey or change in hiring conditions; it provides a calculation for employers to apply to decisions they are making. The next step is to estimate the employee’s fully loaded annual cost, hiring expenses, expected time in the role and the share of hours that will produce needed work, then divide by the hours the business expects to use.
Employers can compare that hourly result with actual specialist quotes and consider whether the work is temporary, recurring or central to the organisation. The article offers no single rate that settles the choice across businesses. Its conclusion remains dependent on each employer’s inputs, including whether AI changes the project’s scope or the value of keeping expertise in-house.
Key Questions
What is a break-even rate?
It is the highest hourly rate an outside specialist can charge before a full-time hire becomes cheaper under the employer’s chosen assumptions. The result depends on total employment costs, hiring expenses, expected tenure and useful workload.
What hourly cost does the analysis estimate for a US developer?
Meyer estimates about $95 per hour actually worked for a median US software developer using the cited BLS wage and employer-cost figures. Adding the assumed one-year share of the average hiring cost raises his estimate to about $98.
Why does utilisation affect the calculation?
A full-time employee’s cost is spread across the hours the employer can use productively. Meyer’s example says that at 50% utilisation, the break-even rate rises from about $98 to about $197 per hour.
Can the US and German figures be compared directly?
No. The US estimate uses a median wage for software developers, while Germany’s €58.50 figure is an average across the information and communication sector. Meyer presents them as starting points, not equivalent measures.
Does the analysis show that augmentation or hiring is always cheaper?
No. It says augmentation can fit short, uncertain or specialist work, while hiring can make economic sense for sustained work that keeps an employee busy. The answer depends on an employer’s own costs, quotes and workload assumptions.
Source: ThorstenMeyerAI.com
