🔍 Read the full analysis: Find The Rate That Makes IT Staff Augmentation More Cost-Effective on ThorstenMeyerAI.com
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TL;DR
A November 6 analysis from ThorstenMeyerAI.com offers a repeatable way to compare staff augmentation with hiring: calculate an employee’s cost per hour actually worked, add hiring costs, then adjust for how much work is available. Its illustrative U.S. break-even rate is about $98 an hour at full utilization, rising to about $197 when a hire is needed for only half their working hours. The figures are estimates, not market-rate data, and the U.S. and German examples use different measures.
Thorsten Meyer published a staff-augmentation break-even calculation on November 6, using public employment-cost data to estimate the hourly rate at which hiring an IT worker may become cheaper than bringing in an outside specialist. The analysis estimates a U.S. median software developer costs an employer about $95 per hour actually worked, or roughly $98 after an illustrative one-year hiring cost; the comparison changes sharply when the employee would not be fully utilized.
The calculation starts with compensation beyond salary. U.S. Bureau of Labor Statistics data for June 2026 show employers in the “management, professional, and related” occupational group paid $78.88 per hour worked, including $54.06 in wages. Meyer calculates that benefits and other employment costs add about 28% to wages plus paid leave. Applying that factor to the BLS median software developer wage of $135,980 a year, reported for May 2025, gives an estimated annual employer cost of about $175,000. Dividing by an estimated 1,830 hours actually worked produces the approximately $95 hourly figure.
That is a calculation, not a published BLS cost estimate for software developers. Meyer’s estimate uses the professional-group cost factor and an assumption that a full-time employee works about 1,830 hours after paid leave. He then adds the average $5,475 cost per non-executive hire in SHRM’s 2025 benchmark survey. Assuming a one-year tenure, that adds about $3 per worked hour, bringing the illustrative break-even rate to approximately $98. With a three-year tenure, the analysis puts it at about $96 an hour.
The central adjustment is utilization: the share of a hire’s working time spent on needed work. Meyer’s example says that at 50% utilization, each productive hour from an employee effectively costs twice as much, lifting the estimated break-even rate from about $98 to about $197. In Germany, Destatis reports an average employer cost of €58.50 per hour worked in the information and communication sector in 2025. That is a sector-wide figure, not a developer-only rate, and should not be treated as directly equivalent to the U.S. occupational estimate.
Infographic 01 · The true cost of a hire
A salary is not the cost
Before you compare a hire with an outside specialist, convert both into the same unit: cost per hour of real work.
What a median US software developer costs the employer per hour actually worked. Our calculation from BLS wage and employer-cost data.
From salary to hourly cost
Calculation, each input published by the BLS
- Median salary, US software developer (May 2025)$135,980
- × 1.28 employer costs on top (benefits, insurance, retirement, payroll taxes)$174,600
- ÷ hours actually worked (2,080 paid, about 12% paid leave)1,830 h
- Cost per hour actually worked≈ $95
Sources: BLS Employer Costs for Employee Compensation, June 2026, Table 4 · BLS median wage, software developers, May 2025 · Destatis, 29 Apr 2026 · Destatis non-wage labour costs · SHRM 2025 benchmarking. Load factor = total compensation ÷ (wages + paid leave) = $78.88 ÷ $61.43. German sector figure covers all jobs in the sector, not only developers.
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Utilization Drives the Cost Comparison
The analysis shows why a simple comparison between a contractor’s hourly quote and an employee’s salary can mislead. Employers also pay for benefits, paid leave, and recruitment, while a hire’s cost per useful hour depends on whether there is enough work to keep that person occupied. A role with intermittent or uncertain demand may leave paid capacity unused; a sustained workload can spread employment costs across more productive hours.
For managers comparing proposals, the useful output is not one universal market rate. It is a case-specific ceiling: estimate the fully loaded cost of a hire, account for recruiting and expected tenure, then adjust for the share of time the work will require. Meyer says the article does not report agency prices because he found no published rate survey with a clear methodology. Readers need to compare the resulting estimate with actual quotes and their own staffing assumptions.
The calculation also leaves room for non-price considerations. Meyer’s article says hiring may suit long-running core work and knowledge an organization cannot afford to lose, while augmentation may fit short, uncertain, or specialist assignments. Those are decision factors, not measured outcomes in the cost model.
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How the Estimate Was Built
Meyer’s report combines figures from three sources: BLS employer cost and wage data, Destatis labor-cost statistics, and SHRM’s recruiting-cost benchmark. The U.S. employer-cost figures cited for June 2026 cover a broad professional occupational group; the median developer wage is from May 2025. The German number covers the information and communication sector in 2025. The periods and populations therefore differ.
The article describes its method as a calculation from public numbers and says it includes no agency rates or provider names. For Germany, Destatis puts non-wage labor costs at €29 for every €100 of gross pay in 2025. Its €58.50 hourly figure includes holiday pay and employer social contributions. Meyer cautions that it covers all jobs in IT and telecommunications, not developers alone.
SHRM’s 2025 survey included 2,371 member organizations. Its reported average hiring cost for non-executive positions was $5,475, while the median was $1,200. Meyer uses the average in the illustration and notes that the benchmark covers roles across occupations, not only technology jobs. The article also says coding-agent productivity evidence remains unsettled; it argues AI changes the inputs to staffing decisions but does not change the basic comparison method.
“A salary is not the cost.”
— Thorsten Meyer, in the November 6 article
Limits of the Published Comparison
The figures are illustrative estimates, not a quoted market rate or a guarantee that augmentation will be cheaper below a particular price. The $95 U.S. cost is calculated from a median wage and a broader professional-group employer-cost factor; the hiring-cost addition assumes a specified tenure. Actual compensation, benefits, recruiting expenses, hours worked, and workload vary by employer and role.
The U.S. and German figures do not measure exactly the same population: one is a U.S. occupation-based calculation and the other a German sector average. The article supplies no agency-rate dataset, and it does not establish a single rate that applies across locations or providers. It also says evidence on how much coding agents increase developer productivity remains unsettled. The source cautions that its calculations are not legal, tax, or financial advice.
Apply the Formula to Current Quotes
The next step for a company considering staff augmentation is to insert its own figures: the full employer cost of a comparable hire, expected recruiting expense, likely tenure, actual hours available, and the amount of time the role would be productively used. It can then compare that estimate with the hourly quotes on hand. The article does not announce a follow-up survey, provider comparison, or further publication date; its stated method is intended for readers to repeat with their own inputs.
Key Questions
What does the break-even rate mean?
It is the estimated highest hourly rate for an outside specialist before the modeled cost of hiring becomes lower. The result depends on employment costs, hiring expense, tenure, and utilization.
What is the report’s U.S. estimate?
Meyer estimates about $95 per hour actually worked for a median U.S. software developer, rising to about $98 after an assumed one-year hiring cost. These are calculations based on public data, not a BLS-published developer cost figure.
Why does utilization change the rate?
If a hire is needed for only half of their working hours, the employer’s cost is spread across fewer useful hours. Meyer’s example puts the break-even estimate near $197 per hour at 50% utilization, compared with about $98 at full utilization.
Are the U.S. and German figures directly comparable?
Not exactly. The U.S. estimate combines a developer median wage with employer-cost data for a broader professional group. Germany’s €58.50 figure is an average across jobs in the information and communication sector.
Does the article provide current agency rates?
No. Meyer says he found no published rate survey with a clear method and does not name providers or report market rates. The calculation is intended to be compared with quotes obtained by each reader.
Source: ThorstenMeyerAI.com
