Complete Comparison of Software Development Hourly Rate: USA vs Europe

Perhaps, you have a project idea to implement but lack a professional team. That’s not a problem! You can always outsource one. But, how can you do that and what are the criteria to choose? The most important factors are the team’s location, technical skills, timing, and, your budget possibilities. Here, you need to make thorough research of all the available software development providers. And, make an average hourly rate for software developer comparison.

To make your search for the best team to fulfill your business needs, we will make a software developer hourly rate US vs EU comparison. Don’t miss the chance to have all the info at hand. Make sure to read the article further.

USA and EU software development hourly rate

USA software development market

The USA is the largest tech-driven market in the world. In 2021, the software development market in the U.S. has 28% of the world’s market share and includes the IT and business services segment. Here, the largest segment is Enterprise Software reaching $115,972 million in revenue.

The U.S. software development market’s revenue is to reach $292,231 million this year. And, with an annual growth rate of 7% (CAGR), it will obtain more than $409,965 million by 2026. If to compare the numbers globally, the USA generates the most revenue in the IT sector.

Besides generating the biggest share of revenue and giving out the biggest salaries, the U.S. includes one of the best IT company giants within its borders. No wonder why the USA releases so many great software solutions highly praised worldwide.

European software development market

In comparison, Europe makes attempts to become a strong leader in the software development market. But it still has a long road to go. The largest segment in Europe is also Enterprise Software covering $56,505 million in revenue. In 2021, the European IT market’s revenue is $145,118 million. And at an annual growth rate of 6.62%, it is expected to reach $199,912 million by 2026. Which is twice as low as in America.

Factors influencing developer salary in the USA and Europe

The salary of every software engineer either in the USA or in Europe has several major and minor factors of influence. These are:

• Total recruiting expenses

Recruitment costs to hire one developer include the payment for in-house recruiters, who are headhunting. Also, the platform they use to communicate with candidates and the timeframes of search (if there’s little time recruiters have, it will cost more) have to be paid for. In addition, if there is a need to involve agencies, their work has to be compensated as well.

• Basic salary

Every country has its basic salary standard based on its economy and welfare. So, the salary of a developer cannot be lower than the basic economic salary settled in the country.

• Employment taxes

Taxes play an important role in salary formation as these are obligatory in every country. Deducing tax payment should not leave the developer with less than a basic salary. It is considered to be illegal.

• Benefits

Every employee accepts an offer only after acknowledging there will be benefits like health insurance, paid vacation days, paid medical leave days, lunch meals, English lessons, paid training, etc. Every company has its benefits based on the company size and welfare. Some of the benefits like health insurance, vacation, and medical leaves are obligatory. And, they have to be included in the employee’s work plan.

• Experience and certifications

Developer experience has yet the most value in hiring a skilled person and in paying for the person’s professionalism. The more experience you have (or certifications) the better you will be rated.

Of course, there may be other minor factors that influence employee salary, but these are rather dependent on every single company’s rules and policies.

What is the hourly rate for a software developer in the USA?

The USA is considered to have one of the highest-paid developers. The software engineer hourly rate in the USA is based on the average salary of a software engineer, which is $116,758 per year. If you have less than a year of experience, your salary might be $109,101 per year. One to two years of experience offers $112,090 per year. More than 6 years of experience equals $128,209 per year. And, 10+ years of experience will result in $146,883 per year. There’s also a possibility to receive an average bonus of $4,000 per year or to own valuable stock papers.

The hourly rate for a software developer in the USA is $46.85 if there’s less than a year of experience. And it will cost around $63.08 per hour if there are more than 10 years of experience.

Among the highest paying cities in the U.S. according to Indeed, there’s:

And these are the software development rates in America today.

What is Europe’s software engineer hourly rate?

Despite being not as generous in salary payments as the USA, the EU still offers big salaries in some of its biggest IT countries. The average software engineer salary in Eastern Europe highly depends on developer experience and is from $6,000 to $36,000 per year. In Western Europe (Norway, Denmark, Netherlands, UK, and others) the average payment ranges from $60,000 and up to $95,000 (Switzerland) per year.

Let’s look closer at the software development hourly rate in western and Eastern Europe.

Western Europe

To the west in Europe software engineer hourly rate is a bit bigger than in the East. For instance, the offshore software development rates include:

• Switzerland, where the average hourly developer rate is $40 – $50
• Denmark, where the average price per hour is $35 – $37
• Norway and Germany, where the vendor takes $23 – $32 an hour
• The Netherlands offer $20 – $24 an hour to their talent developers
• Sweden developers earn for their expertise $24 per hour
• Finland has an average developer’s salary of $23 per hour
• France developers receive almost $22 – $43 per hour
• UK software engineers get around $22 – $29 per hour

Easters Europe

Heading to the east, you will be pleasantly shocked, but the prices will be even lower. The average hourly rate in the Czech Republic and Poland will be up to $25. In Belarus, Hungary, Ukraine, and Romania the rates vary from $11 to $25. These prices are pretty affordable.

Key factors in offshore software development rates comparison

There are some key differences between the software development services in the United States and Europe. For instance,

• Economy and country laws

In the U.S. and Europe, there are different applicable laws and standards that software development providers should be aware of. Also, the economic growth of the country dictates salary rates directly. Here, on the map above, you can see that the programmer hourly rate in the USA is better than in Europe. And if you are a client from the USA and want to hire in-house developers, be prepared that they will cost you a fortune – from $70 per hour up to $150 and even more.

• Location

The location is crucial in software development. For example, a client from America can hire in-house developers and forget about time zone differences or communication troubles. But, if your budget is set for an average rate per hour, consider different parts of Europe. Here, the average developer hourly rate in the USA will be costlier than in the eastern part of Europe. However, there might be complications regarding the time zone difference and communication.

• English level

American developers are native speakers and their salary does not include perfect knowledge of English. But, all the multicultural software engineers will be obliged to learn English except the tech stack, and their understanding of clients will be rated. In Europe, the UK has all the benefits in communicating using English, the other countries speak it as a second language and their command might be not that ideal. Practice makes perfect, as they say.

Our experience with American clients

Inoxoft is a market-leading custom software development company providing software development for the USA in any popular industry. Our developer salary rates are fair enough starting from $25 and up to $49 per hour.

Our experts provide team-client collaborations based on outsourcing engagement models data. Right now there are three potential models we offer to our clients:

If you decide to Rent-a-Team, this model will allow you to control the budget, regulate the time and necessity of features at the current development stage. It avoids excessive expenses and random decisions, especially when the project takes months or years for execution. The terms and conditions of payout are a matter of negotiation, but generally, the sum is based on hourly rates of our developers, materials, and resources used in the course of implementation.

Our Project Team model offers teamwork at a steady pace, covering business needs and dedicating efforts to the most effective management. However, this model does not give you the 100% assurance that development will cost exactly as the fixed sum states. So, we provide an estimation of possible risks and a Risk Premium plan. It is a payment that is already included in the model-related services and covers uncertainties and contingencies that might happen during development.

The Dedicated Team model gives you a team of engineers dedicated to the whole project from start to finish. The client is contracted to pay a monthly salary for the development services, the hourly workload of the full-time and part-time engineers, and team members on board.

Read also our latest tips and tricks on how to outsource software development.

If you want your development to be transparent, risk-free, save up your costs, time, and efforts – contact Inoxoft and let’s talk! We provide the most convenient offshore rates for software development in the USA.

Final thoughts

In our pursuit to understand the hourly wage for software engineers, we have discovered that software engineer salary in the USA per hour is quite higher than the software developer hourly rate in Europe. Why is there such a gap if in the U.S. and Europe there are the same companies? Mainly, the reason lies in the countries economical background, basic salary, taxes, location, quality of work, and so on. If to make the offshore software development rates comparison, Ukraine shows one of the best developers on the market as well as top-quality software development services.