Should You Consider a Software Consultant or Hire a Full-Time Senior Software Developer?

Base Salary

Base salary is the paid to an employee, not including any benefits, bonuses, overhead, G&A or raises.

Direct Expenses

These are the expenses related to the employee’s base salary paid by the company that go beyond the base salary but should be included. Direct expenses include:

• FICA & Unemployment = 9.5%
• Medical Insurance = 7.1%
• Dental & Other Incidentals = 1.5%
• Retirement 401k Match = 3.5%
• Bonus = 6.8%

NOTE: If your calculations are different then these, feel free to enter in 0% to 100% depending upon your company’s rates. For Example: – if your “bonus = 15%” and your “401k match = 6%” then together they equal 21%. Next, subtract our number of 10.3% from your number of 21% and add the difference to our preloaded number of 28% (28% + 10.7% = 38.7% for direct expenses rate) .

Indirect Expenses

When determining what a workflow actually costs, or comparing apples to apples between full-time vs. outsourcing (consultants have these figures included in their hourly rate), these are the expenses that are often forgotten as required costs of doing business and having an employee on staff. Indirect expenses include:

• CEO
• CFO
• HR & Recruiting
• Finance Department
• Marketing
• Sales
• IT
• Hardware
• Software
• License/Fees
• Support

NOTE: If your calculations are different than these, feel free to change the percentage to fit your company’s overhead & G&A. For Example: According to a 2018 Deltek survey (source) that included 638 respondents, in companies listed as Small (under $20 million), Medium ($20 to $99 million), and Large (over $100 million), and included over 90 questions, found the average indirect expenses for the different company sizes came in at Small Business = 56%, Medium Businesses = 57%, and Large Businesses = 48%

Actual Salary

Base Salary plus direct and indirect expenses determine “Actual Salary.

Maximum Hours Available In 12 Months

Based on 2080 hours in a year (260 workdays x 8 hours each day) — Minus 168 hours for paid vacation (21 days) — Minus 64 hours paid holidays and (8 paid holidays) = 1,848 — Adjust to fit each employee’s specifics.

Calculated Base Hourly Rate

“Actual Salary” divided by “Maximum Hours Available.”

NOTE: The weekly amount is the amount you pay each employee whether they are productive or not. The productive hourly rate changes with more or less productivity and is based on industry standard calculations and the weekly base salary.