🔍 Read the full analysis: Which IT Staffing Model Costs Less? Find The Break-Even Rate on ThorstenMeyerAI.com
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TL;DR
An analysis published by Thorsten Meyer on Nov. 6, 2026, calculates that a median-wage U.S. software developer costs an employer about $95 per hour actually worked, rising to about $98 when a one-year hiring cost is included. At 50% utilization, its estimated break-even rate for outside help rises to about $197 per useful hour. These are calculations from public data and stated assumptions, not a survey of staffing rates.
Thorsten Meyer published a calculation on Nov. 6 estimating when hiring a full-time software developer costs less than staff augmentation, putting the U.S. break-even rate at about $98 per hour actually worked under a one-year hiring assumption. The figure is not a market quote: it is a model built from public wage and employer-cost data, with utilization—the share of a hire’s available time spent on needed work—changing the result sharply.
Meyer’s U.S. estimate starts with the Bureau of Labor Statistics’ May 2025 median software developer wage of $135,980 a year. He applies an employer-cost multiplier derived from BLS data for management, professional and related occupations, then divides estimated annual employment cost by roughly 1,830 hours actually worked. That produces an estimated cost of about $95 per worked hour before recruiting costs.
To account for hiring, Meyer uses SHRM’s 2025 average cost per hire for non-executive roles: $5,475. Assuming a one-year stay, he says that adds roughly $3 per hour, bringing the estimated cost to about $98. SHRM’s reported median was $1,200; the figures cover non-executive roles generally, not software hires specifically. Meyer says spreading the cost over three years would put the estimate at about $96 per hour.
The analysis gives a separate German reference point: Destatis reported an average employer cost of €58.50 per hour worked in Germany’s information and communication sector in 2025. That covers a range of jobs in IT and telecommunications, not developers alone, so it is not a like-for-like comparison with the U.S. developer median. Meyer does not provide staffing-provider rates; readers are meant to compare the calculation with quotes they receive.
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 model’s central practical point is that unused employee capacity still costs money. If a company has enough work to keep a developer busy, a full-time hire can spread employment and recruiting costs across many productive hours. If the work is intermittent, the cost per useful hour rises, even though the employee’s salary does not change.
Meyer’s example puts the break-even rate at about $197 per useful hour at 50% utilization, compared with about $98 when the hire’s hours are fully used. In that scenario, an outside specialist charging below the modeled threshold could cost less for the work; a rate above it could favor hiring, subject to the model’s assumptions. That is a decision aid, not a universal price rule: the actual comparison depends on the project, the contractor’s rate and the amount of work available.
The distinction matters for teams choosing between a continuing role and a defined project. A specialist brought in for a short, uncertain assignment avoids committing to a full-time salary when demand may fade. Hiring may make more sense for sustained core work, particularly when the organization needs to retain knowledge over time.
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How the Cost Model Is Built
The BLS figures cited in Meyer’s analysis are not all from the same measure. For June 2026, BLS reported that private-industry employers paid an average of $46.89 per hour worked, including $32.82 in wages and $14.07 in benefits. For management, professional and related occupations, the reported total was $78.88 per hour worked, including wages and benefits. Meyer uses that occupational group’s relationship between wages, paid leave and other employer costs to estimate the loaded cost of a developer at the occupational median wage.
He assumes a standard 2,080 paid hours a year and estimates about 1,830 hours actually worked after accounting for paid leave. The result is his calculation, not a BLS-published developer cost-per-hour figure. For Germany, Destatis’ €58.50 measure already includes holiday pay and employer social contributions, but its sector-wide scope differs from the U.S. occupational estimate.
The article excludes provider-rate comparisons because Meyer says he found no published staffing-rate survey with a clear method and agency prices vary. Its purpose is to provide a repeatable calculation using a reader’s own quotes, rather than to claim that one staffing model is always cheaper.
“There are no market rates in this article and no provider names.”
— Thorsten Meyer, describing the article’s method
Inputs That Can Change the Result
The estimates depend on assumptions that may not fit a particular employer. Meyer uses an occupational benefits relationship to estimate the cost of a median-wage software developer; actual benefits, paid leave, hiring expenses, retention and work schedules differ among companies. The SHRM hiring figures are for non-executive roles across industries, not technology hiring alone, and the one-year stay is an assumption.
The source material’s worked calculation is cut off after introducing the utilization step, so it does not give a complete set of results for utilization levels beyond the stated 50% example. It also does not establish what contractors or staffing firms charge in any market. The German and U.S. estimates have different scopes and currencies, and should not be treated as a direct country ranking. Meyer also says evidence on how much coding agents speed up developers remains unsettled.
Apply the Formula to Real Quotes
The next step for a company using the analysis is to compare its own full-time employment costs and expected productive hours with written outside-staffing quotes. That means checking the relevant wage, employer benefits, paid leave, hiring costs, expected length of employment and likely utilization rather than relying on the illustrative U.S. or German figures alone.
No additional study, staffing-rate survey or follow-up release is identified in the source material. The comparison remains company-specific: until actual rates and workload assumptions are supplied, the published calculation cannot say which option will cost less for a particular project.
Key Questions
What does break-even rate mean in this analysis?
It is the highest hourly rate for outside specialist work that Meyer’s model compares with the cost of hiring, given its assumptions. A quote below the threshold may favor augmentation in that calculation; a quote above it may favor hiring.
What is the estimated U.S. break-even rate?
Meyer estimates about $98 per hour actually worked after adding an assumed one-year hiring cost to an estimated $95 hourly employment cost. The result is a calculation from public data, not a published staffing-market rate.
Why does utilization change the comparison?
A full-time employee costs the employer even when there is not enough useful work to fill the employee’s time. Meyer’s example says that at 50% utilization, the break-even rate rises to about $197 per useful hour.
Can the German and U.S. figures be compared directly?
Not as a like-for-like developer comparison. The German €58.50 per hour figure is a 2025 average for the wider information and communication sector, while the U.S. estimate is based on a software developer’s median wage and a separate employer-cost calculation.
Does the analysis show that staff augmentation is always cheaper?
No. Meyer says the answer depends on the outside rate, the duration of the work and how much productive work a full-time hire would have. The article provides a method for comparing those inputs, not a blanket conclusion.
Source: ThorstenMeyerAI.com
