HACKER Q&A
📣 lonestarter

Build vs. Buy: What is the true cost of hiring a new software developer?


I am stuck in a build vs. buy decision. I will provide hypothetical numbers in this post to ask my question. Let us assume I am paying $300,000 in licensing fees per year to use a commercial product. I know that I can build that commercial product internally if I hire one more software developer. This developer can build and maintain the internally developed product. Let us assume I can pay this new developer $200,000 annual compensation (base pay + bonus + benefits + perks). Can I assume that I would be then saving $100,000 per year?

For some reason, I think this simple calculation is too naive. Surely it can't be that simple, could it? Perhaps, the cost to the company for hiring this new developer is going to be much more than $200,000? What other hidden monetary costs do I need to take care of before deciding the true effective cost of hiring a new developer?

  👤 coderintherye Accepted Answer ✓
1) Development time cost, how long will it take the software developer to actually meet feature parity with the commercial product? If it takes > 6 months, then in your first year you are net negative.

2) How complex is the application and how specialized will the knowledge of building it be...or in other words what is your plan when that developers leaves the following year? Can you easily hire someone to take over or will it be difficult for someone to pick up on the work.