There are three ways to get programming done and they are not interchangeable. An employee is the most expensive per hour and the cheapest per unit of accumulated knowledge. A contractor is flexible and carries a classification question. An agency is the fastest to start and the furthest from your institutional memory. Choosing well means being clear about which of those you actually need.
What it costs, counted properly
The honest comparison is fully loaded. BLS reports a median annual wage of $135,980 for software developers in May 2025, and an employer pays payroll taxes, benefits, equipment, software and recruiting on top of the wage, plus the cost of the time to hire. A contractor rate that looks much higher per hour can be lower in total for work that does not last a year. Model both as annual totals for the actual duration of the need rather than comparing an hourly rate against a salary.
The classification question, answered before it becomes a problem
If you direct someone's daily work, set their hours and supply their tools, calling them a contractor may not make them one. The IRS assesses behavioural control, financial control and the nature of the relationship rather than the label on the agreement, and the Department of Labor publishes guidance on misclassification under the Fair Labor Standards Act. Engaging through an agency that legally employs the person removes the question, which is a large part of what an agency's margin buys.
How to judge candidates when you hire a software engineer
Written tests of algorithm trivia predict very little. What predicts well is asking a candidate to read unfamiliar code and explain it, to describe a system they built and why the design changed, and to talk through what they would check before deploying something risky. Those reveal comprehension, judgement and care, which are the qualities that distinguish expensive good hires from expensive bad ones. Pay for a short piece of real work if you can.
Whichever route you take, fix the ownership
Employees within the scope of employment produce works made for hire automatically under 17 USC 101. Contractors and agency staff do not, because commissioned software is not among the nine categories that can qualify by signed agreement. That means every non employee arrangement needs an express written assignment of copyright. It is a single clause, it is cheap to include at the start, and it is the most common gap found later when a company is being acquired.
Questions people ask about hire programmers
How much does it cost to hire a programmer?
Model it fully loaded for the real duration of the need. Against a BLS median annual wage of $135,980 for software developers in May 2025, an employer also pays taxes, benefits, equipment and recruiting. A higher contractor rate is often cheaper in total for work that will not last a year.
Should you hire a computer programmer as a contractor or an employee?
Employee for work that is continuing and where accumulated knowledge matters. Contractor or agency for bounded or uncertain duration. Be aware that directing daily work makes the classification question live, and the IRS assesses substance rather than the contract label.
What actually predicts a good programmer hire?
Reading unfamiliar code and explaining it, describing a real system and how its design changed, and talking through what they would verify before a risky deployment. A short piece of paid real work predicts better than any interview format.