Outsource or Hire? Finding the Real Cost Break-Even
At face value, a $15,000 outsourcing quote and a $5,000/month contractor look similar. But in-house hiring adds payroll taxes (7.65%), benefits (health, 401k, PTO — often 25%+ of salary), and one-time recruiting and onboarding costs. The total employer cost can easily be 1.3-1.5x the base salary.
This calculator builds the full cost stack for both options: outsource total (project fee + management overhead) versus in-house hire (salary × duration + payroll burden + onboarding). The result tells you which option is cheaper for your specific project scope and timeline.
Beyond raw cost, consider: outsourcing works best for specialized, one-off tasks where you don't need the skill permanently. In-house hiring wins for recurring work where institutional knowledge has long-term value — the cost per hour of productive output drops significantly once a full-time hire is fully ramped up.
For borderline decisions, factor in time-to-value: a contractor can typically start in days, while a full-time hire takes weeks to recruit and months to fully ramp.
Frequently Asked Questions
A common rule of thumb: add 25-40% on top of base salary for the full employer cost burden. This includes employer FICA (7.65%), health insurance ($500-800/employee/month), 401k matching (3-6%), PTO (10-15 days), and miscellaneous HR costs. For quick estimates, use 30% as a safe multiplier.
Freelancers cost less but carry more coordination risk (availability, quality consistency). Agencies charge 15-50% more but provide backup resources and quality guarantees. For critical projects or ongoing relationships, agencies often provide better reliability despite the premium.