Hire Your Own Developer or Contract an Agency?

The Full Cost Calculation of Employment

Dividing a gross annual salary by 250 working days is incorrect. Two corrections are necessary.

Overhead Costs. In addition to the gross salary, the employer's share of social security — approximately one-fifth of the gross salary — as well as contributions to the professional association, workplace, equipment, licenses, and training must be considered.

Available Days. After weekends and holidays, there are about 250 working days in a calendar year. From this, the following must be deducted:

• Vacation: legally at least 24 working days for a six-day week (§ 3 Abs. 1 BUrlG), which corresponds to 20 days for a five-day week; contractually, 28 to 30 days are common.
• Illness: continued payment of wages exists for up to six weeks per illness (§ 3 Abs. 1 EFZG). Costs continue to accrue.
• Internal Time: meetings, training, onboarding, standby.

Realistically, about 200 available days remain, of which not all will be allocated to a project. Divide the full costs by this number — only then is the comparison with a daily rate permissible. The daily rate of Ouhud GmbH is based on effort – binding range after the initial conversation; in the German SME sector, daily rates typically range from about 800 to 1,400 euros net, depending on specialization and region.

What Each Side Can Do That the Other Cannot

The Point That Is Almost Always Overlooked: Rights to the Code

In an employment relationship, the matter is legally regulated: If an employee creates a computer program in the performance of their duties or at the direction of the employer, according to § 69b Abs. 1 UrhG, only the employer is entitled to exercise all property rights, unless otherwise agreed.

This does not apply to an external service provider. Usage rights must be explicitly granted. If there is no clear regulation, the scope is determined by the purpose transfer principle of § 31 Abs. 5 UrhG — in doubt, you will receive only as much as the contractual purpose necessarily requires. Anyone wishing to further develop later or switch service providers needs the regulation in black and white.

The Third Option and Its Risk

Permanently and instruction-bound employing a freelancer in your own team is the option many choose — and it is the legally riskiest. The decisive factor is § 7 Abs. 1 SGB IV: instruction-bound and integration into the work organization indicate employment. If a sham self-employment is determined, there is a risk of back payments of social security contributions. The status can be clarified in advance through the German Pension Insurance according to § 7a SGB IV.

Practical Recommendation

Permanent, consistent workloads with a clear task profile favor employment. A project with a defined start and end favors a service provider. The most sensible approach is often a combination: The service provider builds, an internal person takes over operations and further development — with handover, access, and complete rights assignment.