The short answer
A day rate covers salary, employer taxes, benefits, equipment, recruitment, bench time between engagements, management overhead and the supplier's margin. Comparing it against a bare salary figure is not a like for like comparison and will always make hiring look cheaper than it is.
The real question is not which is cheaper per day. It is what each one costs over the period you need the capacity, including what happens when you no longer need it.
What sits inside a day rate
- The developer's own pay
- Employer taxes and statutory contributions in their country
- Paid leave, sick pay and whatever benefits the supplier provides
- Equipment, software licences and infrastructure
- Recruitment and vetting, amortised across engagements
- Time between engagements when nobody is paying for them
- The supplier's management, admin and margin
That list is why a rate can look high against a salary and still be reasonable. You are buying the whole package without the commitment.
What stays with you either way
Some costs do not move, and leaving them out of the comparison is how augmentation gets oversold.
| Cost | Hiring | Augmentation |
|---|---|---|
| Your management time | Yes | Yes |
| Code review by your team | Yes | Yes |
| Onboarding effort | Yes | Yes, and repeated per engagement |
| Product decisions and direction | Yes | Yes |
| Recruitment and interviewing | Yes, substantial | Minimal |
| Notice, redundancy, wind-down | Yes | Notice period only |
The onboarding row matters most over time. A permanent hire is onboarded once. A sequence of short augmentation engagements pays that cost repeatedly, which is a strong argument for fewer, longer engagements.
Comparing over a realistic period
- Decide how long you actually need the capacity. If the honest answer is indefinitely, hiring is usually the better economics.
- Add recruitment cost and the weeks of senior time interviewing.
- Add the gap between offer and start, typically one to three months of nothing being delivered.
- Add the probability that the first hire does not work out, and what that costs.
- Compare that total against the rate for the same period, and include your own onboarding cost on both sides.
Run honestly, this usually shows augmentation ahead for periods under a year and hiring ahead beyond it. Where it lands for you depends on your market and how quickly you can recruit.
What drives the rate up or down
- Seniority, which is the largest single factor
- Scarcity of the specific skill
- Location and the cost base the supplier operates in
- Engagement length, since longer commitments reduce bench risk
- Notice period, because flexibility has a price
- Whether you need specific hours rather than any working day
Engagement length is the most negotiable. A supplier pricing a one-month engagement carries the risk of finding the next one; a six-month commitment removes that and the rate usually reflects it.
The comparison nobody runs
The cost of not having the capacity at all. A feature that ships six months late because you were recruiting has a cost, and it rarely appears in the spreadsheet next to the day rate.
That is not an argument for augmentation in every case. It is an argument for putting the delay in the comparison, because leaving it out systematically favours whichever option is slower to start.