The Real Cost of Working with a Freelance Developer: Revising Basic Assumptions

Those who never hired a senior freelance developer (but caught themselves thinking about this option from time to time) might have various assumptions about such an experience. As if a challenge to find an affordable developer was not enough. Now companies also need to decide between a full-time professional at their disposal and a freelancer. Are offshore contractors a more lucrative alternative or not is the key question. After all, when we say “the real cost of working with a freelance developer,” do we mean money only?

Freelance pricing model deconstructed

Freelance pricing model deconstructed

The price paid when hiring a freelancer is defined by an hourly rate and a few other behind-the-scenes variables that may directly influence the result. It means that companies can pay less even with a higher hourly rate. Or pay more, even with a lower one. The variables are the following:

• Corporate information security

  Compromising sensitive corporate information can cost the owners a lot. The fears that dealing with a freelancer can involve issues with confidentiality or reliability may overshadow initial rationale. It cannot be said that there is no ground behind this biased attitude, but luckily, this variable can be easily excluded from the end price.

Solution: As long as the company uses freelance platforms that offer vetted professionals, it will be able to find a reliable dream contractor. Signing an NDA and direct communication with the developer without third parties will also warrant corporate information security. So it is all about companies learning to navigate between major freelance platforms and readiness to choose a well-trodden way from bias to trust.

• Quality

It is directly dependent on the contractor's real hard and soft skills. Phony professional competency can often be “sold” to the company by giving vivid promises and lowering the hourly rate. It can result in wasted time and inconsistency between demand and expertise, making up extra expenses the company will have to pay for cooperation with such a specialist.

Solution: Avoiding the negative outcomes of this variable is possible with the help of reviews and ratings, which are superpowers in today’s gig economy, not to mention the job done by vetted freelance platforms. Ideally, they should create the ground for a highly professional and ethical freelance community with developers of any narrow specialization. However, it makes sense to pay attention to the algorithms the platforms use to match the task with the right specialist or the way they do that manually by support specialists.

• Communication barriers

Unfortunately, it can make any cost-effective cooperation impossible.

Solution: Using platforms that perceive good speaking English as an essential part of a skills profile is the only way to save money and time.

Only when those variables are considered, it makes sense to talk about an hourly rate - the basis of the pricing model.

IT freelancers' average time working on their tasks is 43 hours/week, or 2,236 hours/year (Freelancermap). However, this time covers both the actual work on the client’s project and other business tasks such as sourcing for a job. According to the Upwork pricing model, the net time-on-work, or billable time, is just 60% of the total time, or 1342 hours/year. This figure is the average freelancer work hours baseline, which will be applied below.

Geography class: top countries with high-skilled developers and their hourly rate

With the research by SkillsValue, FreelancerMap, and SalaryExpert, we can rediscover different parts of the world in terms of senior developers’ talent market and their hourly rates.

Europe

Some Easters and Central European countries are in the list of Top 20 countries with the best developers in the world. But what about their hourly rate?

Russia: an hourly rate of $27.9/hour translates to $37,560 yearly for senior freelance developers, while in-house senior developers charge $41,718 a year.

Poland: with an hourly rate of $19.03/hour, freelance seniors get $25,538/year, while their in-house colleagues earn an average gross salary of $49,092.

Hungary: freelance senior’s yearly income is $21,163/year at a $15.77 hourly rate, while in-house developers charge $40,792/year.

Western and Northern Europe is another key player on the market, who, however, charge more than their colleagues from Eastern and Central Europe.

The United Kingdom: A senior freelance developer will cost a company $51,036/year at an hourly rate of $38.03, which is still less than $98,259.90/year for a full-house developer.

Sweden: The average salary of an in-house developer and freelance senior is $82,546/year and $42,931 ($31.99/hour), respectively.

France: The expertise of a freelance senior will cost $35.29/hour or $47,359/year. Compare it with $89,616/year for an in-house specialist.

Southern Europe also does not lag behind.

Spain: Freelancers get $36,798/year at $27.42/hour, while in-house employees - $70,726/year.

Greece: To hire a full-time senior software developer, the company will have to be ready to pay $59,238/year, while a freelancer of the same level will cost $32,208/year (or $24/hour).

Italy: Here, hiring freelance app developers cost $32.94 per hour, totaling $44,206 in annual earnings. In-house, you will have to churn out $83,678/yr.

Asia

The archetypical Asian IT labor market, represented mainly by China and India, gets extended with some new emerging markets in countries like Vietnam, Turkey, and the Philippines.

China: The hourly rate here is $22.36/hour for freelancers, with the corresponding sum of $30,007/year. An in-house professional earns $58,447/year.

India: An hourly rate of $7.80 translates to $10,468/year for freelancers, while full-time seniors get $20,489/year.

The Philippines: Freelance developers’ hourly rate is just $5.47 ($7341 year), while hiring an in-house developer will cost a company $14,255/year.

America

Latin America follows similar patterns when it comes to the difference between freelancers’ hourly rate versus that of full-time developers. The top countries with seniors here are Mexico and Brazil, with Columbia being ready to pick up the slack as the emerging market.

Mexico: Seasoned developers get on average $10.48/hour, which translates to the yearly salary of $14,064. A full-time tech-savvy costs $27,199.

Brazil: With an hourly rate of $13.25/hour, Brazilian freelancers get an annual net salary of $17,782. In comparison, full-timers earn 34,494/year.

Colombia: A freelance professional will charge $6.29/hour, or $8,441/year, while their in-house colleagues get no less than $16,324/year.

Developers in North America make companies stretch their budgets for high-quality work more than in other regions. Especially if a company wants an experienced in-house senior.

The United States: Freelancers work for an hourly rate of $51.15 here, which makes up $68,643/year. But it is much less than $132,145/year charged by a full-time developer.

Canada: An hourly rate of $42.11, set by freelancers, sums up to $56,512/year. But almost doubles, reaching $108,781/year if the company wants its own full-time developer.

Australia

Freelance seniors charge $45.14/hour, earning $60,578/year. Companies should have $116,825/year to afford a full-time developer.

The figures above demonstrate a quite articulate tendency of pricing for the high-quality work among freelancers and full-time developers and those across various regions. Figures are telling, and however surprising they may be, they just reflect our reality.

And so what?

The decision to work with a senior freelance developer may become a start of a long-term, cost-effective, mutually beneficial collaboration. But only if to nip the potential issues in the bud. Considering hourly rate and other variables, resolved through the use of reliable freelance platforms, will help companies turn the “real cost of working with a freelancer” question into the “real gain from working with a freelancer” experience. And this is basically the kind of relations companies should strive for.