What is the Hourly Cost of a Software Developer in 2025?

Nearly all industries—be it finance, healthcare, government, e-commerce, food and beverages, legal or academic circles, and various types of businesses ranging from startups to large corporations—require streamlining of their processes and services.

If a business decides to hire software developers to build an application for them (private health app, diet app, or online, such as eBay), It is essential to look at the cost to know the amount they are able to manage. You should consider the costs varying from the initial hiring process and education to monthly wages. The cost of hiring a developer will vary based on various factors, such as the country of origin, skill level, and the type of contract.

You must also consider whether you need someone skilled in mobile application development, web-based app development, or any of these. Are you unsure about two types of software houses or an independent developer? The latter can affect the overall picture of professionalism and engagement and the final cost of software development.

Naturally, recruiting software designers from other countries with better exchange rates will cost less, but you need to be prepared for remote monitoring of work and interaction.

Pros and Cons of Outsourced vs Full-Time Software Developers

When the time comes to create teams to create software but it is difficult for companies to hire a software developer or employees who are full-time. Both have benefits and drawbacks since both are beneficial in various situations. We've examined the advantages and disadvantages of each to make an informed choice for your business.

Pros of Hiring Contractors:

Flexibility and Scalability:

The primary benefit of employing contractors is the diversity they bring to the team you hire. Contractors can be used for specific tasks or projects and allow you to expand your workforce down or up based on the requirements. This is especially useful when it comes to technology, where the nature of projects and the demands for them are rapidly changing.

Specialized Skills:

Contractors usually have specific abilities they've gained through a variety of assignments. If you choose to hire software engineers, you'll benefit from the experience of the experts who've gained their knowledge through a myriad of projects. They can provide imaginative and innovative solutions to problems in software design.

Cost Savings:

While the initial hourly costs of contractors might appear costly, companies can cut costs associated with benefits and time off from work, office space costs, and overhead costs. Contractors are accountable for their taxes and benefits, which allows businesses to distribute their budgets more effectively.

Time to Market:

Contractors focus on the task they're tasked with finishing. They are not involved in conflicts with other companies and can focus their energy on creating. This improves development speed and ensures that projects are completed more quickly.

Cons of Hiring Contractors:

Limited Integration:

Contractors might be in different ways than full-time staffers. They might not experience the same degree of commitment to your business as full-time employees. Their inability to integrate will affect the cohesion of your team and the company's culture, mainly if many of your employees are freelancers. If you have a mix of employees and contractors, That's not a problem.

Risk of Dependency:

Dependent on contractors to design your software may cause problems to the smooth running of your business. If contractors are employed to create software but later quit the project, the transfer of information could be difficult, and the timeline may be compromised. Additionally, after the project is complete and the contractors no longer are needed, the project may end without funds to continue developing the software.

Communication Challenges:

Contractors may be away from their offices. This could cause communication issues. Collaboration and sharing information can require more effort, particularly when your team is spread across multiple locations and time zones.

Pros of Hiring Full-Time Employees:

Company Loyalty and Culture:

Full-time employees are more likely to reflect the company's values and long-term objectives. They have a knack for being integrated into the corporate culture and team, which can build a sense of commitment and loyalty that will positively affect the workforce.

Consistent Availability:

Full-time employees are accessible throughout the working day and are also more readily available to discuss and gather. This improves collaboration and communication within the company.

Investment in Skill Development:

When you employ full-time workers, you can invest in their skill growth through continuing education and training initiatives. This can aid in expanding your team's capabilities and overall efficiency.

Cons of Hiring Full-Time Employees:

Fixed Costs and Overhead:

The full-time employee is a contract with fixed costs, which comprises a salary, benefits, and office space. This is a substantial expense, particularly for small businesses or those with a limited budget.

Limited Scalability:

Contrarily, contractors who are full-time employees may offer different levels of flexibility. A software developer for hire could take the time and effort required, making it challenging to shift workloads swiftly.

Risk of Skill Gaps:

If you employ the hiring methods you choose to use, you may be faced with the possibility of hiring workers who aren't skilled enough. Training the employees or hiring them to fill the gaps could be an issue, which could delay the project's timeframe as well as the items that are delivered.

Average Custom Software Development Cost

Calculating the costs of custom software development is essential, but it isn't simple. The price of developing software will vary based on the program's needs, the level of complexity, the technology employed, the duration of development, and the cost of the team that creates the software.

It is nevertheless possible to provide a general price for software developers. We will examine the cost of developing software and the hourly rate for software developers, classified by the quantity of work required.

Small Custom Software Development Projects

Small-scale projects within custom software development are like small programs designed to satisfy a business's requirements. These types of projects usually focus on the most basic features and functions and are created to address just a particular task or process in a company. They are smaller in scope and typically focus on simple tasks without the necessity of integrating large-scale.

This is an example of a basic CRM application that tracks interactions with clients, handles contact details, and creates basic reports on data.

Price Range: $5,000 - $20,000

Hourly Rates: $15 - $30 per hour

Mid-Sized Custom Software Development Projects

Applications of a mid-sized size are advanced in complexity and offer more features in attributes and functions. They can be customized to those who require more for various functions and usually require integration with existing software and services provided by third-party suppliers. Customization is a key feature that permits the software to integrate with specific business procedures.

An excellent example of an eCommerce site that has been developed to give customers a simple shopping experience includes features such as modified user interfaces, integration with payment gateways, inventory management, and order status monitoring.

Price Range: $25,000 - $60,000

Hourly Rates: $40 - $75 per hour

Large-Scale Custom Software Development Projects

The massive projects that are part of software development are designed for large functionality, scalability, and high security. They offer capabilities that exceed the basics. They typically incorporate different databases, systems, or third-party software. They are suitable for multinational companies or with high-level operational requirements.

Example: A good illustration shows an Enterprise Resource Planning (ERP) system with finance modules to support HR management that are integrated into supply chain management and sophisticated analysis.

Price Range: $75,000 - $120,000

Hourly Rates: $80 - $125+ per hour

Factors Affecting Software Developer Rates

When deciding on software developers' hourly rates, various things must be considered. These variables can particularly impact the cost of their hourly work.

Let's look at these problems:

Skill & Experience

Regarding software developer ratings, experience and level play a significant role. Developers with more years of experience and specialization generally have higher hourly rates.

Their experience and knowledge allow them to tackle challenging tasks efficiently, which leads to quicker project completion. They are paying you for their expertise, ability to resolve issues, and confidence that you're in safe hands.

Location

The area is a major aspect for the calculation for developer charges. The rates vary based on the location.

For example, developers in big tech hubs such as Silicon Valley generally demand higher hourly salaries due to the cost of living.

However, outsourcing locations like Eastern Europe offer competitive rates while maintaining quality. The selection of the ideal location can dramatically impact the cost of your undertaking.

Technology Stack

A technology stack used to develop software is an essential element in software developers' hourly work rate.

Experience in the latest technology, such as blockchain Artificial Intelligence and virtual reality, generally costs money.

This is because those with expertise in cutting-edge technologies and languages are sought-after, and their skills will add value to your venture.

Project Complexity

The complexity of the program is a different impacting factor on the rate.

Complex projects that require thorough design, intricate design, and a custom solution usually require developers of a higher level.

Therefore, costs are typically higher for more complex projects, indicating the expertise required to complete them successfully.

Industry Specialization

Furthermore, the industry-specific information affects the development rate of developers.

Developers who know the particulars and requirements of a specific industry, such as finance, health care, or even e-commerce, will charge higher due to their special experience and knowledge.

They can create solutions that are adapted to the specific requirements of the industry's standards and regulations.

What Determines a Developer's Hourly Rate?

The cost of software developers is determined by a myriad of variables, ranging from their geographic area to their work experience and customer feedback. Businesses consider these aspects when selecting whom to hire, and freelancers consider them when determining their rates.

Geographical Location

Developers' hourly rates world map

Eastern Peak says developers from offshore countries such as Poland, Ukraine, and South Africa have the lowest hourly rates. The next is the nearshore of South America, and the most expensive developers are those from the US.

Business Type

The fact that a developer is an employee or a freelancer will affect their hourly rates. The freelancer is responsible for expenses and overheads like office equipment, office expenses, and insurance. Companies pay for such things as health insurance and paid leave under their hourly rate calculation. Therefore, businesses only naturally pay higher hourly rates than freelancers.

Concerning companies, they could be categorized into different kinds:

• Enterprise-class companies (Microsoft, Dell, Symantec): These companies are big businesses with several hundred to a few thousand developers and other employees. They pay among the highest in the industry. These are what are known as the "dream jobs" for every developer, especially at the beginning of their careers.

• Businesses of the Business Class (Rightpoint, WillowTree): These are companies with fewer employees, usually with 100 to 1000 employees. The hourly rate of their employees, as per data from Clutch, is significantly lower, ranging from $150 to $300. The initial cost of their work is typically about $125,000, but they could rise to $5,000,000.

• Midmarket Businesses (The Software House, thoughtbot): It typically have no more than 100 staff members. Similar to most mid-market businesses, they provide an excellent balance of quality and price, and their workers generally earn around $50 an hour. They can work with smaller and medium-sized enterprises or projects as well as large corporations.

• Small-Market Businesses (Urban Information, Unleashed Technologies): The companies in this category employ up to 50 people, and only a couple of projects per year allow them to remain in business. They usually concentrate on a specific task, such as on mobile applications, UI and UX style, or one particular programming language. Typically, these companies are in partnership with small companies or local businesses.

• Offshore and Nearshore Companies: Offshore (Central and Eastern Europe) companies have the lowest hourly rate: $25-$50. Nearshore businesses are more expensive, and hourly rates range between $40 and $75. Working with these companies is not without certain risks, but for those new to development, it might be an excellent option to start building a portfolio. Language and time zone differences and obstacles can make these businesses more difficult to work with; however, most offshore companies endeavor to streamline the processes to facilitate tracking for employees and customers.

Development Experience

What is the process by which freelance software developers calculate the cost of their services? There are two kinds of freelancers: crusty and raw.

As jokes aside, two kinds of freelancers are:

1.     Newbies have just completed their education and are ready to take on the world.

2.     Professionals who have had enough of a 9-5 job

For those new to the field, it's recommended to refrain from demanding the highest hourly rate because it could turn off potential customers. It is usually best for new freelancers to let their clients determine the price of their work. New developers are enthusiastic and motivated to start working as soon as they can; however, they do not have a record of work that prospective employers or clients could assess their previous work.

Because the novices are still learning, customers want to avoid paying the highest dollar if the developer has a mishap or fails to complete the project punctually. This is the case in any area of work. You must be patient before you begin earning more money. Thus, the pay rate for newbies will generally be between $15 and $25.

A skilled software development freelancer has been in the IT world for long enough to recognize what to be able to count on. They aren't thrilled about new projects; however, they may charge more hourly fees based on their previous experience and probably experience with several programming languages. They may behave like a famous detective and work only on intriguing projects. The hourly rate for them within Western Europe, the USA, and Western Europe will vary between $45 and $100.

Payoneer has gathered data on hourly rates for freelancers in 2020 across every aspect of development. Rates for various IT options start from just $20. Additionally, it includes every freelancer from beginner to professional.

Conclusion

If you're within the United States and need to bring in tech experts to your internal team, Finding the best specialists at reasonable costs can be difficult. What better way to go than a hybrid alternative work-life model and searching for other sources to supplement your internal team?

A hybrid staff is the solution to the current employment challenges faced by most businesses. The best sources for talent acquisition provide rapid access to highly skilled experts in the development field and others and allow you to save additional costs by utilizing IT staff augmentation and dedicated staff services.

We have extensive experience in establishing and managing hybrid teams of developers and a talent pool. We offer prospective partners the best quality-price ratio. Our software developers can complete the same amount of work at the same level of quality for just $35-50/hour.