Full-Time Developer or Contractors: What $100K Buys

You have a budget and no way to judge whether the person you hire will deliver. The wrong choice usually costs you less in money than in months, because you find out late. This guide covers what a budget buys, the four common ways to hire, the contract terms that protect you, and how to test a candidate when you cannot read code.

What $100K buys #

The cost of a salaried developer is more than the salary. The U.S. Bureau of Labor Statistics reports a May 2025 median annual wage of $135,980 for software developers, with the lowest 10 percent under $82,460 and the highest 10 percent over $214,670 (BLS Occupational Outlook Handbook). Separately, its June 2026 employer-cost release shows wages making up 68.5 percent of what an employer pays for a full-time private-industry worker, with benefits and legally required costs making up the rest (BLS ECEC).

Put the two together:

# Inputs 1-2 are published BLS figures. Inputs 3-4 are yours: replace them.
median_wage = 135_980 # BLS OOH, software developers, May 2025 median wage
wage_share  = 0.685   # BLS ECEC, June 2026: wages are 68.5% of employer cost, full-time private industry
budget      = 100_000 # your budget
rate        = 100.0   # EXAMPLE ONLY: a contractor or agency hourly rate you were quoted

loaded      = median_wage / wage_share
months_ft   = budget / loaded * 12
hours_quote = budget / rate
weeks_40    = hours_quote / 40

puts "Loaded cost of one median-wage developer: $#{loaded.round}/year"
puts "Budget buys: #{months_ft.round(1)} months of that employee"
puts "At $#{rate.round}/hour: #{hours_quote.round} hours = #{weeks_40.round(1)} weeks of one person at 40 hours/week"

Run with Ruby 4.0.6:

Loaded cost of one median-wage developer: $198511/year
Budget buys: 6.0 months of that employee
At $100/hour: 1000 hours = 25.0 weeks of one person at 40 hours/week

So $100K buys about six months of a median-wage U.S. employee, loaded. The contractor line is arithmetic on an example rate, not a market figure. We have no authoritative source for contractor, offshore or agency rates, and they vary too much by person, country and scope for an average to help. Get three written quotes for the same job description and compare them with this worksheet. The wage figure is a national median across all languages, excludes equity, and varies by city. The 68.5 percent wage share is an average for all full-time private-industry workers, applied here to developers as an assumption.

Four ways to hire #

The best choice depends on whether the work is a defined project or an ongoing product, and whether anyone on your side can direct and review it. If nobody can, an agency or embedded team that runs its own process is usually less risky than a lone contractor you must supervise.

But a contractor costs less per hour. On the invoice, often. The hours you spend explaining, reviewing and re-explaining are also a cost, and a solo contractor has no one to catch their mistakes. Our post on why cheap developers get expensive without a review goes through how that plays out.

The contractor-or-employee question #

If you hire a contractor in the U.S. and then direct what they do, how they do it and when, they may legally be an employee. The IRS groups the evidence into three categories: behavioral (does the company control “what the worker does and how the worker does his or her job”), financial (how the worker is paid, who provides tools and reimburses expenses) and the type of relationship (written contracts, benefits, whether the relationship continues) (IRS: independent contractor or employee). Rules differ by state and country, so ask an employment lawyer before a long engagement.

Contract terms that protect you #

This is general information, not legal advice. Have a lawyer review the paper.

1. Own the code. For U.S. copyright, a work by an employee within the scope of employment is “made for hire.” For a commissioned work, it counts only if it falls into one of nine listed categories and both parties sign a written agreement saying so. The list does not name software as a category (U.S. Copyright Office, Circular 30). A signed assignment of all rights to your company closes the gap.
2. Own the accounts. Create the code repository, hosting and domain accounts in your company’s name and invite the developers. If the repository lives in a contractor’s personal account, you are negotiating for your own product.
3. Pay for accepted work. Tie payments to something you can see: a demo on a test version of the product, a merged change. Avoid a large payment before any working software exists.
4. Write the exit. Notice period, handover of documentation and credentials, and what happens to work in progress.
5. Name a replacement or a refund process if the person leaves mid-project.

How to test a candidate when you cannot read code #

The research on hiring points to structure. A 2022 re-analysis of selection studies in the Journal of Applied Psychology found structured interviews ranked first among the methods compared, and that most validity estimates were lower than earlier summaries reported (Sackett et al., 2022). Ask every candidate the same questions and score the answers against a written sheet. These work for a non-technical interviewer because you are judging whether the answer is specific, not whether it is correct:

1. Walk me through something you shipped, what you decided, and what you would change.
2. Show me where I can see it running.
3. What did the last project teach you about estimating?
4. What do you need from me in the first week?
5. If this deadline is not realistic, how will I find out and when?
6. Who reviews your work, and what happens when the reviewer disagrees?
7. Can I speak to someone you worked with recently?

Then give a paid work sample. For a Rails role, we describe one in how to hire Ruby developers. If you want a technical person to sit in on the session, how to vet engineers as a non-technical founder covers what to ask them.

Red flags #

• They cannot show running software from a past project, or only screenshots.
• They explain nothing in plain English and treat that as normal.
• They want a large payment before any work.
• They resist owning the code and accounts in your name, or the contract is vague about ownership.
• Every answer is yes. A candidate who never mentions a risk has not thought about your project.

A hybrid, and what to do first #

You can combine models: a part-time senior reviewer over contractors, or an agency team with one employee on your side who learns the product. The reviewer is the piece most budgets skip, and it is the one that catches problems while they are cheap.

1. Decide whether the work is a project or an ongoing product.
2. Write the job description and the acceptance test: what can you see working on what date?
3. Get three quotes. Run the worksheet.
4. Make ownership of code and accounts a condition of the offer.

If you want an embedded team instead of managing individuals, see how we work. JetThoughts is rated 4.8/5 on Clutch.

Sources #

• U.S. Bureau of Labor Statistics, Software Developers, Quality Assurance Analysts, and Testers - May 2025 wage percentiles.
• U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation, June 2026 - wage and benefit shares.
• IRS, Independent Contractor (Self-Employed) or Employee? - the behavioral, financial and relationship tests.
• U.S. Copyright Office, Circular 30: Works Made for Hire, revised August 2024.
• Sackett, Zhang, Berry and Lievens, Revisiting meta-analytic estimates of validity in personnel selection, Journal of Applied Psychology, 2022.