A pair of 400 hp engines roar to life and you’re at the helm of your luxury speedboat. Beyond the mahogany panelled deck, the ocean is endless. Your guest laughs as the wind blows through their hair, and as you reach a cruising speed of 31 knots you duck into the downstairs living quarters to avail yourself of the fully stocked…
…and then you’re jolted awake at your desk. You’re still cool as hell, but not Italian speedboat cool. Yet.
As an agency yourself, you’re already a fan of companies outsourcing specialized work. Still, if you don’t currently employ a developer or team of developers, you’ve probably toyed with the idea, imagining the convenience and cost savings. A random salary conversion calculator will tell you that a $70K developer salary translates into a $36/hour resource you can bill out to your clients at a profit.
But, there are hidden costs. Here comes the math:
- A basic health plan is $400/month. Your rent and office costs, divided by the number of desks, could be between $500 and $1500/month. A computer, prorated over its gleeful arc into obsolescence, costs about $1000/year. So far, your $70K developer costs around $87,800.
- You also have to consider how many hours you can possibly bill a developer out for. At 7.5 hours per day and 5 days a week, there are 1950 working hours in the year. Subtract 165 hours (~22 days) of vacation and statutory holiday time, and the workable hours drop to 1785.
- If 60% of your developer’s working hours are billable, you’re keeping them fairly busy. We know some agencies with numbers as low as 20%. In the better case scenario (60% billable) your developer has 1071 earning hours, and in the lower end waking nightmare (20% billable) that number drops to 357.
- Taking the total cost per resource and dividing that by their number of billable hours, you get the actual hourly cost of employing a developer. Spoiler alert: it isn’t $36/hour.
- You could be paying anywhere from $82/hour ($87,800 / 1071) to $246/hour ($87,800 / 357).
Keep in mind that the best case scenario is only possible if you’re paying a modest salary, not offering much in the way of benefits, and keep your developer pretty busy year-round. It’s more likely that you’re somewhere in the middle, paying at least $150/hour and losing money on every project they work on.
That road does not lead to the speedboat store.
Wondering what your developer is costing you? The calculator below will help you find out.
As a coding agency, every project that comes in will make use of our developers’ skills. That’s how we’re able to keep them busy full-time, and why we can afford to treat them really well. Use Nerder as your outsourced dev partner and you won’t need to incur the cost of full-time in-house resources. Instead, you’ll enjoy a reasonable rate for access to a variety of developers with a variety of skill sets, whenever (and only when) you need them.
And then you can start setting aside your savings and profit for that speedboat.