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Ask HN: Build vs. Buy: What is the true cost of hiring a new software developer?
I am stuck in a build vs. buy decision. I will provide hypothetical numbers in this post to ask my question. Let us assume I am paying $300,000 in licensing fees per year to use a commercial product. I know that I can build that commercial product internally if I hire one more software developer. This developer can build and maintain the internally developed product. Let us assume I can pay this new developer $200,000 annual compensation (base pay + bonus + benefits + perks). Can I assume that I would be then saving $100,000 per year?
For some reason, I think this simple calculation is too naive. Surely it can't be that simple, could it? Perhaps, the cost to the company for hiring this new developer is going to be much more than $200,000? What other hidden monetary costs do I need to take care of before deciding the true effective cost of hiring a new developer?
- coderintherye 7y ago1) Development time cost, how long will it take the software developer to actually meet feature parity with the commercial product? If it takes > 6 months, then in your first year you are net negative. 2) How complex is the application and how specialized will the knowledge of building it be...or in other words what is your plan when that developers leaves the following year? Can you easily hire someone to take over or will it be difficult for someone to pick up on the work.
- lonestarter 7y agoGood points. Thanks! Definitely need to take care (1) and (2). I am also concerned about the true $-value of the developer. Say I hire one for $200,000 per year, is that all the money my company would spend on him? Or is it going to be more than that? Are there any other hidden costs I am not seeing right now? For example, one thing that came up in my mind is team offsite events which we have. That's not part of the compensation package on paper but our company does have to bear some extra expenses for every new developer. Fortunately, it is not a large amount to worry about. But I am worried if there is any large amount that I need to worry about and I am missing out in my analysis.
- pabs3 7y agoDoes the commercial package have any competitors? If not I'd be asking why not. Either it isn't as simple to rebuild the product as you are assuming, or maybe someone hasn't tried it yet. If it turns out to be feasible you could sell your developer's work cheaper than the commercial package and then open source it once you have made back the development costs.