Free calculator · Finance
Compare the cost of hiring in-house with a contracted team
Enter what an in-house engineer would cost you and a real quote for a contracted engineer. The calculator costs both over 12, 24 or 36 months, counts hiring time, ramp-up and replacements on each side, and shows the cost per productive engineer-month and the contracted price at which both cost the same.
How this is calculated
Both options are costed in cash over the same horizon and divided by the engineer-months of productive work they deliver. Ramp-up counts at half productivity on both sides. Every input can be changed; the on-cost presets are worked out from published employer contribution figures.
Step by step
- Loaded monthly cost per engineer = base salary × (1 + employer on-cost) ÷ 12. A country preset works the on-cost out from published rates for the salary entered.
- In-house months employed = horizon − time to hire. Cash = loaded monthly cost × salaried months + recruiting fee × hires + equipment per year × months employed ÷ 12.
- Leavers = engineers × attrition × horizon ÷ 12. Each adds a recruiting fee, removes the time to hire from salaried months, and removes time to hire + half the ramp-up from productive months.
- In-house productive months = engineers × (months employed − half the ramp-up) − leavers × (time to hire + half the ramp-up).
- Contracted cash = engineers × monthly price × (horizon − start delay). Productive months = engineers × (horizon − start delay − half the ramp-up).
- Cost per productive engineer-month = cash ÷ productive months on each side. The difference is reported by its sign: whichever option costs less.
- Break-even price = in-house cost per productive month × contracted productive months ÷ (engineers × contracted months).
Default assumptions
Assumptions marked adjustable can be changed in the calculator; the others are fixed parts of the model.
| Assumption | Default | Sources |
|---|---|---|
| Engineersadjustable | 3 engineers | None |
| Base salary per engineer (example)adjustable | $150,000 a year | None |
| Employer on-cost presetadjustable | Custom (enter a percentage) | |
| Employer on-cost (custom)adjustable | 25% | |
| Recruiting fee per hireadjustable | 20% | None |
| Equipment, software and space per engineer (example)adjustable | $5,000 a year | None |
| Time to hireadjustable | 2 months | None |
| In-house ramp-up (at 50% productivity)adjustable | 3 months | None |
| Horizonadjustable | 24 months | None |
| Engineers leaving per yearadjustable | 0% | None |
| Contracted price per engineer per month (placeholder)adjustable | $12,000 a month | None |
| Contracted team start delayadjustable | 0.50 months | None |
| Contracted team ramp-up (at 50% productivity)adjustable | 1 months | None |
| US wages and salaries, professional occupations | $50.98 per hour worked | |
| US paid leave, professional occupations | $6.78 per hour worked | |
| US insurance, professional occupations | $5.47 per hour worked | |
| US retirement and savings, professional occupations | $2.75 per hour worked | |
| US legally required benefits, professional occupations | $4.81 per hour worked | |
| UK employer National Insurance rate | 15% | |
| UK secondary threshold | £5,000 a year | |
| UK minimum employer pension contribution | 3% | |
| UK qualifying earnings, lower limit | £6,240 a year | |
| UK qualifying earnings, upper limit | £50,270 a year | |
| Singapore employer CPF rate (age 55 and below) | 17% | |
| Singapore CPF Ordinary Wage ceiling | S$8,000 a month |
What this doesn’t model
- Ramp-up is a straight 50% productivity for the months entered; real ramp-up is gradual and varies by person.
- Attrition is an average: fractional leavers are allowed, and replacements are assumed to happen inside the horizon.
- Salary and prices are held flat over the horizon.
- The UK preset ignores the Employment Allowance and salary sacrifice; the Singapore preset assumes an employee aged 55 or below paid evenly over 12 months; the US preset is a national average for professional occupations.
- Countries whose employer contributions we couldn't check against a primary source on the review date have no preset; enter your own percentage.
- Pay rises, bonuses, equity and other variable pay.
- Your managers' time spent hiring, onboarding and managing either team.
- Office space, unless you include it in the equipment line.
- Notice periods, minimum terms and price changes in a supplier's contract.
- Differences in quality, seniority, retention of knowledge and how well either team fits your work.
- Taxes on the supplier's invoices, withholding tax and currency exchange.
Sources
- US Bureau of Labor Statistics, Employer Costs for Employee Compensation, Table 4: private industry workers by occupational and industry group (9 Sep 2026). Accessed . June 2026. Professional and related occupations: wages and salaries $50.98, paid leave $6.78, supplemental pay $2.90, insurance $5.47, retirement and savings $2.75, legally required benefits $4.81 per hour worked.
- US Bureau of Labor Statistics, Employer Costs for Employee Compensation — June 2026 (9 Sep 2026). Accessed . Private industry employers spent $46.89 per hour worked on compensation: wages and salaries 70.0%, benefits 30.0%.
- HM Revenue & Customs (GOV.UK), Rates and thresholds for employers 2026 to 2027. Accessed . Employer (secondary) Class 1 National Insurance: 15% for category A above the secondary threshold of £5,000 a year, from 6 April 2026 to 5 April 2027.
- GOV.UK, Workplace pensions: what you, your employer and the government pay. Accessed . Employer minimum 3% under automatic enrolment, on earnings between £6,240 and £50,270 a year.
- Central Provident Fund Board, Singapore, How much CPF contributions to pay. Accessed . From 1 January 2026, the employer pays 17% of wages for employees aged 55 and below earning more than $750 a month.
- Central Provident Fund Board, Singapore, What is the Ordinary Wage (OW) ceiling?. Accessed . The Ordinary Wage ceiling is $8,000 a month in 2026; ordinary wages above it attract no CPF contributions.
Last reviewed by the QuantmHill engineering team. Found an error?
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Frequently asked questions
The cash each option costs over the period you choose, divided by the engineer-months of productive work it delivers. In-house includes salary, employer on-cost, recruiting fees, equipment, time to hire, ramp-up and replacing leavers. The contracted side uses the monthly price you enter, a start delay and a ramp-up.
Because the two options start at different times and take different times to get up to speed. A team that costs less in total but starts three months later may deliver less work. Dividing by productive months compares like with like.
The US preset uses the US Bureau of Labor Statistics' June 2026 Employer Costs for Employee Compensation for professional occupations: insurance, retirement and legally required benefits as a share of wages and paid leave, about 23%. The UK preset uses HMRC's 2026–27 employer National Insurance (15% above £5,000) plus the 3% automatic-enrolment pension minimum. The Singapore preset uses the CPF Board's 17% employer rate up to the $8,000 monthly ceiling.
A real quote for the engineers you would actually get. The default is a placeholder so the page opens on a worked example; it is not QuantmHill's price or anyone else's. The break-even figure tells you the highest monthly price at which contracting still costs no more per productive engineer-month.
Each year, the share of engineers you enter leaves and is replaced. Every replacement costs another recruiting fee, leaves the seat empty (and unpaid) for the time to hire, and needs another ramp-up. Attrition is off by default, which favours in-house hiring; add your own rate.
Pay rises, bonuses and equity, your managers' time, office space unless you include it in the equipment line, contract terms such as notice periods, taxes and exchange rates, and differences in quality or fit between the two teams. Treat the result as one input to the decision.
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