How Much Does It Cost to Hire a Software Developer? Freelance vs Full-Time Developers

The tech talent market is extremely tight. U.S. demand for developers is soaring: one forecast estimates 7.1 million tech jobs by 2034 (up from 6M in 2023), and 70% of tech workers report multiple job offers.

Concurrently, skills like generative AI are in explosive demand (job postings up ~1,800%). As a result, companies struggle to fill roles domestically. For example, a 2023 survey found only 2.1% of developers are unemployed– a clear sign of a scarce talent pool.

In this competitive landscape, and amid the rise of AI, organizations are exploring all options: local hires, global freelancing, and nearshore staffing.

In this post, we’ll break down the costs, benefits, and trade-offs of hiring freelance versus full-time developers, helping you decide which model fits your project, budget, and company size. We’ll also highlight how strategic staffing partners can streamline the hiring process.

Annual Cost of Hiring Freelancers vs. Full-Time Engineers

Developer salaries vary widely by skill and region. In the U.S., a typical full-time software engineer earns approximately $ 127,000 per year (the BLS median). After adding payroll taxes, benefits, and overhead (an extra 25–30% of salary), the “fully-loaded” cost can approach $160–$170K annually per developer.

Salaries are even higher for in-demand specialties; for example, Glassdoor data shows that the median salary for a Machine Learning Engineer is about $ 156,000 and for a Cybersecurity Engineer, it is about $ 157,000. Bureau of Labor Statistics data puts the median “AI Engineer” at around $145K. In short, recruiting US-based devs with AI/ML skills often means six-figure salaries.

By contrast, freelance developers are paid by the hour or project, with no employer benefits. U.S. freelance devs typically charge about $60–$100 per hour, according to industry surveys. If fully utilized (≈1,800 hours/year), that equates to roughly $108–$180K per year. (High-end specialists can charge even more.) In other words, the nominal pay rate for a U.S. freelancer is similar to a salaried engineer, but without paid leave or 401k. Freelancers do cover their own taxes and equipment.

Location matters too. Latin American software engineers earn far lower wages due to the lower cost of living. Senior developers there often earn 1/3 to 1/5 of U.S. salaries. Staffing partners can deliver LATAM talent at these rates to U.S. clients. All told, your total budget depends on model and locale: paying a U.S. staff engineer may cost well over $150K fully-loaded, whereas a LATAM contractor could cost ~$40K–$60K. Conversely, hiring a U.S. freelancer at $80–100/hr has roughly the same base cost but fewer overhead obligations.

Key Differences Between Freelancers and Full-Time Developers

• Availability & Commitment. A full-time employee works your schedule and is dedicated to your company’s goals. A freelancer typically splits time among multiple clients and has no obligation beyond the contract. As a result, full-time devs can pivot to urgent work easily, while freelancers may have limited hours or require booking in advance.
• Specialization & Scalability. Freelancers often specialize in niche skills. You can quickly tap a Vue.js expert, blockchain specialist, or AI consultant for a one-off need without retraining your team. And it’s easy to scale freelance hires up or down by project volume. In contrast, full-time hires build institutional knowledge and broad capability over time. It takes weeks or months to recruit a senior engineer, so staffing levels grow more slowly.
• Project vs. Long-Term Focus. Freelancers excel at finite, well-defined projects (short-term sprints, audits, R&D pilots). They can deliver a specific feature or report and then move on. Full-time developers are better for ongoing product development and maintenance. They invest in the product’s long-term success and are motivated by the company’s vision, not just one payday.
• Legal & HR Responsibilities. Hiring a full-time employee entails payroll taxes, benefits, and legal compliance. Employers must pay Social Security + Medicare on wages, plus costs for unemployment insurance, health insurance, retirement, etc. These add roughly 25–30% on top of base salary. By contrast, an independent contractor handles their own taxes/insurance. You avoid unemployment claims, benefits administration, and workers’ compensation for freelancers. (However, you must ensure proper contractor agreements and IP assignment.)
• Onboarding & Integration. Freelancers generally onboard faster. They usually have their own equipment, development tools, and can follow existing documentation to start delivering immediately. Employees require formal onboarding: HR paperwork, training on company processes, tech stacks, and provisioned hardware/software. Even a vetted freelancer“may not be completely familiar with your particular SOPs, so you must spend time bringing them up to speed.
• Impact on Business. These differences affect companies differently. A small startup might welcome a freelancer’s flexibility and lower upfront cost, but risk losing continuity if key knowledge isn’t retained. Large enterprises may prefer employees for data security, compliance, and culture fit, but still use contractors for non-core or bursty needs. In all cases, balancing speed and cost (freelance) against control and stability (full-time) is key.

Engagement Models for Freelancers and Full-Time Engineers

Freelancer Agreements

There are three common models:

• Fixed-price projects: The developer quotes a total fee for defined deliverables. This gives cost certainty, but scope changes can be expensive or contentious.
• Hourly contracts: You pay the freelancer’s hourly rate for actual time worked. This is flexible and suits agile projects, but requires trust in time reporting.
• Retainers or retainment: You agree to pay for a set number of hours (or days) per week or month. This secures prioritized access to a freelancer’s time (often at a slight premium) and is common for ongoing partnerships.

Full-Time Arrangements

Options include:

• Direct Hire: Recruiting and employing a developer on payroll (with salary + benefits + taxes). This is straightforward but involves recruiting costs, interviews, and long lead times.
• Staff Augmentation/EOR (Employer of Record): You hire developers through a third-party firm. The firm handles payroll, benefits, and local compliance, while the dev works on your projects as if in-house. This gives you control over the day-to-day work but simplifies admin. It’s also the preferred model of many growing companies.
• Outsourcing/Managed Team: Contracting an entire team or function to an external company (e.g., a development agency or staffing partner). You pay a bundled fee (often monthly) and get a self-managed team. This model scales quickly but sacrifices direct oversight.

Each engagement model has trade-offs in cost, control, and flexibility. Often companies use a mix: core staff plus nearshore specialists as needed.

Pros and Cons of Freelancers vs. Full-Time Developers

Choosing between freelance and full-time developers isn’t just about cost—it’s about what your business needs to scale effectively. From flexibility and specialization to long-term alignment and operational control, each model comes with distinct trade-offs. Below is a quick comparison to help you evaluate the best fit for your project and company stage.

Freelance Developers – Pros:

• Flexibility & Speed: Easy to scale up/down and onboard quickly for short projects. You can tap global talent with diverse skillsets.
• Cost for Short-Term: Potentially lower expense for finite engagements. Using freelancers can save up to 50% compared to hiring employees, since you skip benefits and recruitment costs.
• Specialized Skills: Access niche experts (e.g., Web3, VR/AR, AI) on demand. A freelancer focused on a skill is often more current on that technology than a generalist employee.

Freelance Developers – Cons:

• Limited Commitment: They are not obligated to your company beyond the contract. Availability can vary, and high-demand freelancers might juggle many clients.
• Onboarding & Alignment: They lack institutional knowledge and may not fully “own” the project. Quality can vary widely; you may need to vet resumes or interviews more rigorously.
• Communication Overhead: Asynchronous work and scattered availability can slow feedback cycles. Managing multiple freelancers adds coordination overhead.
• Potential IP/Vetting Issues: Companies often cite concerns over intellectual property and contractor vetting. Engaging freelancers may require extra legal contracts and technical interviews to ensure fit.

Full-Time Developers – Pros:

• Consistency & Continuity: Employees are long-term team members. They absorb your tech stack, coding standards, and company vision. This leads to smoother project handoffs and fewer knowledge gaps.
• Team Alignment: Full-timers can attend internal meetings, build cross-team relationships, and share company culture. They generally exhibit greater “company loyalty” – focusing on your long-term success.
• Simplified Management: You control their schedules and priorities. You also avoid the hassle of renewing contracts or re-vetting new freelancers for each project.

Full-Time Developers – Cons:

• Higher Fixed Costs: Salaries, benefits, and office overhead must be paid regardless of workload. For very short projects, a full hire may be overkill.
• Less Agility: Hiring full-time takes longer (recruiting, interviewing). Once onboarded, letting go (if needed) can be slow and costly.
• Resource Utilization Risk: If your internal team isn’t kept busy, idle employees still consume payroll. There’s less budget flexibility.

Ultimately, many companies blend models: a core full-time team supplemented by freelancers or contractors as needed.

When to Hire Freelancers vs. Full-Time Engineers

Startups:

• Hire Freelance When: The budget is tight and you need flexibility. For instance, if you need a one-time UX audit, blockchain prototype, or quick feature, a freelancer can fill the gap fast without committing headcount. Freelancers are ideal for specialized, short-term tasks or when you want to delay fixed costs until product-market fit is clearer.
• Hire Full-Time When: You need someone invested in your long-term vision. If you’re building a core product and want a founding tech team, a full-time developer (or technical co-founder) who shares equity and stays on post-launch may be smarter. Full-timers help build consistent roadmaps and company culture from day one.

Mid-Market Companies:

• Hire Freelance When: You’re experimenting with new features (R&D, pilots, new market initiatives) that don’t yet justify a full hire. Or you have cyclical workloads (e.g. an annual event, end-of-year reporting) where short-term contractors can handle spikes without inflating payroll.
• Hire Full-Time When: Your projects demand team cohesion and process consistency. If multiple teams need to collaborate deeply (e.g., product, DevOps, QA), or you’re optimizing and iterating the core product, a stable staff enhances communication and knowledge sharing. Full-time engineers are better for improving cross-team workflows and long-term maintenance.

Enterprises:

• Hire Freelance When: You need external innovation or specialized know-how on short notice (e.g., a cybersecurity audit, a temporary AI consulting squad, or local regulatory projects in a foreign market). Large firms often use contractors for exploratory projects or to supplement staff in niche areas. They may also hire global contractors for locale-specific tasks (for example, translating software into different languages or complying with foreign data laws).
• Hire Full-Time When: You require maximum control, security, and long-term retention. Regulated industries (finance, healthcare) typically prefer full-time hires to ensure strict data compliance and intellectual property protection. Enterprises building critical systems (ERP, banking infrastructure, etc.) favor in-house teams for accountability and deep integration with business units.

In each scenario, consider mission-criticality, timeline, and budget. Upwork’s analysis advises using freelancers for specialized expertise and urgent short-term needs, while reserving full-time roles for foundational, ongoing work.

Build Smarter, Scale Faster with BEON.tech

Whether you’re looking to expand your core team or need specialized developers for a key initiative, BEON.tech gives you on-demand access to LATAM’s top 1% of engineering talent. Our developers are rigorously vetted, English-proficient, and aligned with U.S. time zones—ready to integrate seamlessly into your team.

With BEON.tech, you get:

• Flexible hiring models: scale your team up or down as needed, with no long-term commitment required.
• End-to-end support: we handle recruiting, onboarding, payroll, and legal compliance—so you can focus on delivery.
• AI-ready talent: many of our engineers are already working with Generative AI, ML, and cutting-edge technologies.
• Cost-efficiency without compromise: gain Silicon Valley-level quality at a fraction of the cost.

Partner with BEON.tech to accelerate your roadmap with reliable, high-performance engineers—tailored to your project needs. Let ‘s talk.

Damian Wasserman

Damian is a passionate Computer Science Major who has worked on the development of state-of-the-art technology throughout his whole life. In 2018, Damian founded BEON.tech in partnership with Michel Cohen to provide elite Latin American talent to US businesses exclusively.