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could cost way under $100/hr. Way under seems like a bit of a stretch. The average developer salary is $92,000 per year, which works out to around $45/hr if we

could cost way under $100/hr. Way under seems like a bit of a stretch. The average developer salary is $92,000 per year, which works out to around $45/hr if we assume a standard work week. The rule of thumb is that you need double or even triple of what you are paying your employees in order to be able to afford to employ them. Even if you are the business owner and employee, you still need to recoup the costs of running the business for yourself so the math remains the same. It seems the bare minimum you could charge for the average developer is $90/hr, which is just shy of the $100/hr. quoted. Above average developers will require much more per hour. You could, perhaps, charge way less if you hired below average developers, but that seems to fall under the first category and not the one the parent is referencing. This, of course, assumes that you are operating in the USA. Numbers may differ in less costly parts of the world.

ricardobeat 14y ago
Oops, I missed the part about not being able to use freelancers. $50-$60/hr is a common rate for freelance developers. There also excellent devs that don't live in countries as expensive as the US.
- joshuakarjala 14y ago
  I think the point was, that even if you are a freelance - you still have employ yourself, with all the overhead that implies: running costs, pension, vacation, accounting etc. So basically most above-average developers in US (and areas with similar wages / living expenses) would charge at least $100 per hours. Your point about developers in countries with lower living expenses than the US is valid. But that would also depend on the customer being in said country.
- cookiecaper 14y ago
  This is a recipe for disaster. I have been full-time freelance for the last 4 years, and scaling into a full-service consultancy with all the accoutrements (like an office for my employees), and I can tell you that $100/hr is really a bare minimum for meaningful profit margins on developers. I have a few contracts under that (for various reasons), and with the new hires I'm contemplating, I am going to have to raise their rates or drop off and replace them with better paying clients. As a freelancer, you might be able to get away with $70-$80/hr minimum, but $100 minimum still is easily within a reasonable price range. I would expect a fair market rate for great developers to be something more like $150-$200/hr. Unfortunately, I have a hard enough time getting clients around here at $100, but in order to really have the business firing on all cylinders, I would need to be charging $150+ for each developer hour. The margins at $100 and below are barely enough to make payroll; there is almost nothing left to pay for things like significant marketing or PR, investment in equipment or facilities, loose time to spend on internal projects or internal maintenance, etc.
- flyinRyan 14y ago
  Where the developer lives has nothing to do with what they cost (at least it shouldn't). Cost is a function of value. So if you get a really cheap developer then either you've found someone who has no idea what their market rate is (what else are they ignorant about? Anything that will hurt your product?) or they're just not as good as someone more expensive (the majority of the cases, though people don't want to believe this. They want to think they've found "a deal").
mongol 14y ago
Hi, I am from another country. When you say that the average developer salaray is $92000 does that include all costs associated with that employment? Including insurance and possible taxes? I am just trying to compare. EDIT: I don't mean _all_ costs (not like desk and computer) but salary + benefits + insurance + pension + taxes.
- randomdata 14y ago
  $92,000 is what the employee gets paid by the company. It would include any costs incurred by the employee (income tax, transportation costs, etc.), but would not include things like benefits, insurance, etc. that are paid for by the employer. That is, in part, why you need, at least, twice the rate of your employee in order to be able to afford them.
- weaksauce 14y ago
  No that's usually just the salary without the other costs incurred to the employer.
tedmiston 14y ago
I don't think average is a good metric, or we should be more specific about what skill level we're discussing. Entry-level developer jobs (i.e., BS in CS) pay $40k-$60k in the midwest.
- randomdata 14y ago
  I feel it still sets a decent baseline for the purposes of discussion. We will never be able to accurately model every last developer's situation. Though entry-level developers are even more costly to employ. They require more training, more time to solve problems that are old-hat to experienced developers, etc. You still need to bill them out at, say, $100/hr. with the expectation that for every productive hour, they have an unproductive hour that isn't billable.

ricardobeat 14y ago

Oops, I missed the part about not being able to use freelancers. $50-$60/hr is a common rate for freelance developers. There also excellent devs that don't live in countries as expensive as the US.

joshuakarjala 14y ago
I think the point was, that even if you are a freelance - you still have employ yourself, with all the overhead that implies: running costs, pension, vacation, accounting etc. So basically most above-average developers in US (and areas with similar wages / living expenses) would charge at least $100 per hours. Your point about developers in countries with lower living expenses than the US is valid. But that would also depend on the customer being in said country.
cookiecaper 14y ago
This is a recipe for disaster. I have been full-time freelance for the last 4 years, and scaling into a full-service consultancy with all the accoutrements (like an office for my employees), and I can tell you that $100/hr is really a bare minimum for meaningful profit margins on developers. I have a few contracts under that (for various reasons), and with the new hires I'm contemplating, I am going to have to raise their rates or drop off and replace them with better paying clients. As a freelancer, you might be able to get away with $70-$80/hr minimum, but $100 minimum still is easily within a reasonable price range. I would expect a fair market rate for great developers to be something more like $150-$200/hr. Unfortunately, I have a hard enough time getting clients around here at $100, but in order to really have the business firing on all cylinders, I would need to be charging $150+ for each developer hour. The margins at $100 and below are barely enough to make payroll; there is almost nothing left to pay for things like significant marketing or PR, investment in equipment or facilities, loose time to spend on internal projects or internal maintenance, etc.
flyinRyan 14y ago
Where the developer lives has nothing to do with what they cost (at least it shouldn't). Cost is a function of value. So if you get a really cheap developer then either you've found someone who has no idea what their market rate is (what else are they ignorant about? Anything that will hurt your product?) or they're just not as good as someone more expensive (the majority of the cases, though people don't want to believe this. They want to think they've found "a deal").

mongol 14y ago

Hi, I am from another country. When you say that the average developer salaray is $92000 does that include all costs associated with that employment? Including insurance and possible taxes? I am just trying to compare. EDIT: I don't mean _all_ costs (not like desk and computer) but salary + benefits + insurance + pension + taxes.

randomdata 14y ago
$92,000 is what the employee gets paid by the company. It would include any costs incurred by the employee (income tax, transportation costs, etc.), but would not include things like benefits, insurance, etc. that are paid for by the employer. That is, in part, why you need, at least, twice the rate of your employee in order to be able to afford them.
weaksauce 14y ago
No that's usually just the salary without the other costs incurred to the employer.

tedmiston 14y ago

I don't think average is a good metric, or we should be more specific about what skill level we're discussing. Entry-level developer jobs (i.e., BS in CS) pay $40k-$60k in the midwest.

randomdata 14y ago
I feel it still sets a decent baseline for the purposes of discussion. We will never be able to accurately model every last developer's situation. Though entry-level developers are even more costly to employ. They require more training, more time to solve problems that are old-hat to experienced developers, etc. You still need to bill them out at, say, $100/hr. with the expectation that for every productive hour, they have an unproductive hour that isn't billable.