Choosing to hire an agency or a full time developer for your company is an important decision. Having a company that offers both, I have clear insight on which is best based on a few different factors. First, let me define the different types of hire clearly.
Agency: when you hire an agency, you’re not hiring a specific developer to do job x, you’re instead hiring the agency to do work x. This means that who is working on your project is abstracted away from you – you’re simply trusting the agency’s credibility to get the work done vs. assessing a specific developer. The most common format of hiring an agency is through a monthly bandwidth model. This is where you pay the agency for x hours a month of ‘bandwidth’ (or resources/materials). Usually the cost ranges from $100-200/hour. The second format of hiring an agency is project based. This is where you pay x dollars for the project and there’s a fixed scope. This is a format that most agencies are going away from. It also doesn’t work too well for the client due to the scope constraints (topic for another day).
Full time developer: when I say full time developer, it’s someone that joins your team directly (usually on hourly basis or fixed salary). I say full time to convey that you’re working with them directly (but it can also be part time).
Now that I’ve defined these terms, let’s get to the two factors that matter most.
1: Stage of company
The most important factor to consider (even more than cost) is what stage your company is currently at. A good rule of thumb is that if you’re building out the 1st version of your product, then you should hire an agency. On a similar note, if you don’t have any developers or designers on your team currently and you’re not a technical founder, then you should definitely hire an agency. The problem with hiring a full time developer is that you need to manage them and in most cases, you need a UI/UX designer to provide designs. So now, the problem is, if you’re looking to hire a full time developer at such an early stage, you then have to hire a designer and maybe a project manager. You now have 3 salaries to handle with 0 guarantee of quality. When you hire an agency, you get a team that they’ve already put together that gets the job done with some guarantee of quality. At the earlier stages, it makes much more sense to hire an agency.
The next important factor is cost. A typical agency costs $150/hour (we’re lower ;)) and a typical software developer is $40/hour (global avg based on our data). If you directly compare these two, it seems obvious that a full time developer is cheaper; however, this direct comparison is incorrect. You have to consider productivity and optimal hours usage. Let me explain: first, productivity, an agency’s developer is not necessarily much more productive than a single developer than you hire full time; however, the way the agency splits up the hours (between design, development, QA, etc) and manages the project allows for hyper productivity. You can have similar (or higher) productivity levels than any agency once you have a full team of all types of roles needed in the full development lifecycle. Considering that fact, it actually comes out to much cheaper to hire an agency for the 1st version of your product than hiring developers full time. There are of course exceptions to this (for ex, some deep AI product that you need very specific developers for or if you as the founder have technical/design knowledge). In general though, it will likely be less costly to hire an agency for your mvp/v1 of your product vs. a team of developers/designers/QA/pm full time.
What it comes down to
If you meet any of the following then you can (and should) hire a full time developer:
1. You’re a technical founder
2. Have a development team already
3. Have good UI/UX design & management knowledge
4. You’re working on some really deep tech (AI, etc)
If you have more questions, feel free to email me email@example.com. I wish you the best with building out your company :)