Web Development · Project management

What is your monthly cost for development in a monthly retainer model?

Kenneth Jones

September 6th, 2016

I am looking into hiring an agency to work on long-term development work on a monthly retainer. The cost is about ~$3,700 per "developer seat" month for an "American" firm with local account managers and Indian developers. (There are some project managers and architects in Europe as well). 

I was talking to one of my advisors that told me that $4,000 per developer month could get me a mid-level person in the Ukraine. Now I am thinking I might be overpaying if I pull the trigger with the development company using Indian developers?

Does anyone have some general monthly retainer averages by developer skill level? By country?

If you are using an agency with a monthly retainer model how much are you paying? Where are the developers located?

Sergey Melnikov Senior Application Developer at OMEGABYTE Computer Corporation

September 7th, 2016

God damn! My company in Odessa, Ukraine is going to pay me ~$1500 for full hours, but they actually count time, so potentially even less. And they are trying to sell me as a team lead for US/Canada based company to clean up the code from 15+ years of Indian dev (which is a bad situation to say the least)!

So I don't know how much the management costs, but an estimation of $4000 per head/month is pretty realistic if not cautious. If you are eager to work with freelancers, you can get your work done even cheaper. Same qualification, less staff. But it depends on the amount of work: see, if you can search oDesk for talents vs hiring a company. Starting from 5 developers it could be easier to get by with a company, that will manage the whole thing. If less, just contact them individually and make one of them responsible.

If you want to evaluate from current salaries, please take a look at this page (it has data for most of IT in Ukraine - shows lower, median and high-level expectations, if you can't figure out what's written in Ukrainian):

Hercules Schonfeldt JFNA Director Digital Technology

September 7th, 2016

Hi Kenneth,

I have local developers (US) and Have Strong Developers in Ukraine. I'm developer myself and I speak russian which makes communications easy (ukrainians do speak russian).
Here is a break down:

Local Developer full time: $120hr x 6(hours) x 5(days) x 4.3 (month) = $15,480
With retainer: $8000 a month

Ukrainian Developers full time: $25hr x 6(hours) x 5(days) x 4.3 (month) = $3225
With retainer: $2700 a month

I've been working with ukrainian developing companies for over a year, no problem at all. 
Tried Indian Developers , had to cleanup code and waste time on explaining and time difference. Don't bother. Find European or South American developers. Or send me PM.

Julius Caamic Transforming digital ideas in to reality through the web

September 9th, 2016

You might want to consider talented people from the Philippines. Cheap, quality with care.

Sebastien Mirolo CEO DjaoDjin inc.

September 8th, 2016

Kenneth, I think it makes a lot of sense to concentrate engineering skills horizontally (i.e. that's what company like AWS or CloudFlare do) and have boutique entrepreneur leverage those skills for their own vertical market.

We, @djaodjin, have a pricing model with an initial upfront investment to develop the product and an on-going monthly fee for hosting (https://djaodjin.com/services/). With that model we had mixed experiences:

1. A product that can be built in one-go with minimal to no changes after release (ex: LMS) can be highly profitable. Your investment is made back in a few months and the hosting costs are affordable compared to the revenue the product brings ($10,000/month of revenue is not cheap change but also not enough for a 2-3 people business). 

2. A product that has a niche market but requires some iteration is also a good fit for a fully outsourced team as long as you are very loose on the timing of new features. Pay a little. Make some money. Pay a little more...

3. In a very competitive market, where you want to release new features, like yesterday, an outsourced team might not work. An outsourced CTO/COO will definitely not work. The problem here is that you want someone to be able to tell you "No". Outsourced developers do not have that authority. They will be happy to bill you whatever you ask. Quality of the product will suffer. You will get frustrated.

Because of the trust relationship I established with customers, I have provided CTO-like services to businesses in category #3. It is a stop gap solution. The under-investment in building an in-house tech team really hurts growth for those businesses in category #3.

Kenneth Jones

September 8th, 2016

@Sebastien Mirolo 

Given the size of the market and annual revenue possibilities for this industry, I see us outsourcing the initial product development, ongoing dev ops, and maintenance for the long term (read: forever)

There is opportunity with the product of course, but the annual revenues are too small to have a full in-house team. I know everyone has their opinions on this, but I'd love to hear from anyone that has made a model like this work. Complete outsourcing of all tech or limited in-house staff.

Himanshu Chudasama Founder CEO at Veloz Techform & Start-n-Excel

September 9th, 2016

I do not fully agree to Sebastien atleast on point 3. There are really cool companies around who work for the benefit of the client and do give advice as necessary. Yes there are majority of companies who like Sebastien said, would happily go through considering their financial interests only. These days Offshore CTO model has really taken off where you take limited services only.

There are also option of including Offshore CTO as an equity holding partner instead of on a pay off. This could help in improving their interest in the project as well as reduce the investment costs.

Steve Owens Startup Expert

September 13th, 2016

I know that there is a common belief that engineering services are cheaper in other countries.  I am here to tell you this is a myth.  We have employees all over the world, and the cost is very similar regardless of were it comes from.   Like most things in this world, engineering services is a commodity.  Like other commodities (oil, iron, wheat, etc) the price people are willing to pay has very little to do with the cost of producing the commodity.  Even if a company decided to sell for less, that company would very soon run out of capacity.  Arbitrage in a free market economy are small and short lived - its just the way the system works.

Vladimir Trushkin Project and Program Manager, Software/IT

September 7th, 2016

We have experience working with developers in Belarus and India. The quality and experience and, what is more important, technology stack knowledge and ability to learn quickly is a game changer and favors Eastern Europeans. Belarus average developers costs in range 3-4k. Indians are usually within 2-3k range. But the performance and quality of work, make Belarus guys a better choice by far.

Tarun Wadhawan Programme Manager

September 7th, 2016

Hi Kenneth Monthly retainers are most fit when you have a project structure in place not to mention that a technical PM who is locally based is the most fit to oversee the process. 3700 or 4000 a month a seat, in India / Ukraine is still high. I would consider breaking your project into milestones or even structured work packages and agree on a fixed cost versus per seat. That way you both will benefit from unexpected surprises which is a known in offshore development. As far as rates you can consult websites like freelancer or even fiverr where you can get quotes from agencies or even individuals from different geographical locations to help get going with your analysis. Hope this helps.

Joren Winge iOS Developer

September 7th, 2016

I worked on a project where they used developers from Armenia that had an agency. They did pretty decent work, and they were paying I think $3600 a head per full time developer. I can give you their info if you want. They also had designers, and strategy people on tap as well and spoke decent English. I've heard Ukrainian developers are great, but can be a little flaky. I've never personally worked with any. I do have a friend, John Uke, who is currently living in the Ukraine. He is putting teams together there and managing projects for US based companies. I can give you his contact also. Personally I've had nothing but bad experiences working with Chinese and Indian developers remotely. I've seen a lot of horror stories and been pulled in to fix projects. If it's too messy I pass. Communication can be a little tough as well. I've met tons of great Indian developers in the US and I'm sure there are tons of great Chinese developers but you have to separate the wheat from the and there is a lot of chaff.