Four ways to build a team, and what each actually costs
| Model | Typical cost | Notice period |
|---|---|---|
| Permanent hire, senior engineer | £85k–£115k fully loaded per year | 1–3 months statutory |
| Freelancer, direct engagement | £350–£750 per day | Whatever the contract sets, often none |
| Boutique agency, project team | £700–£1,100 blended day rate | Ends when the project ends |
| Dedicated team, monthly engagement | £5,000–£28,000 per month | 30 days after a 3-month minimum |
The permanent hire row already includes loading, not just salary — see the next section for how that number is built. The other three rows are what you are billed; there is no hidden multiplier to add on top.
The real cost of a permanent hire
A London senior developer advertised at £85,000 does not cost £85,000. Employer National Insurance, pension contributions, recruitment fees of 15–25% of first-year salary, equipment, software licences, and the productivity cost of a three-to-six-month ramp to full output all sit on top. A reasonable planning multiplier is 1.3 to 1.4 times salary for the fully loaded annual cost.
Then there is the risk side of the ledger. If the hire does not work out, you are back to a 3–6 month recruitment cycle with the fees paid again. If the workload drops, redundancy has its own statutory cost and process. None of that shows up on the offer letter, but it is real money that only permanent hiring carries.
Freelancers and agencies: lower rate, different risk
A freelancer's day rate looks cheaper than an agency's blended rate, and for a single well-scoped task it usually is. But a freelance rate buys one person's time and nothing else — no cover when they are ill or between contracts, no code review from someone else, no project management, and no continuity if they take a better offer mid-project.
An agency or dedicated team's blended rate includes project management, QA, and bench depth, which is why it is not directly comparable to a freelance day rate. It is closer to comparable against the fully loaded cost of hiring a small in-house team, and at that comparison it is usually cheaper once recruitment, onboarding, and idle time are counted.
What a dedicated team costs at AyTech
| Team size | Monthly cost | Fits |
|---|---|---|
| Single senior engineer | From £5,000 | Ongoing feature work and maintenance |
| Small team, 2–3 engineers plus lead | £10,000–£18,000 | Active product development, most common |
| Full product team, 3–4 engineers plus QA | £18,000–£28,000 | High-velocity roadmaps |
All three sizes carry a 3-month minimum term and 30 days' notice after that, with no recruitment fees and a start within roughly 2 weeks. Full detail on how the engagement runs is on our dedicated team working page.
Costs that quotes and offer letters both leave out
Line items that change the real answer:
Which model fits which stage
Permanent hires make sense for a core, steady-state team building one product for years, where the ramp-up cost is amortised over a long tenure. Freelancers suit a single well-defined task with a clear brief and no need for ongoing management. A dedicated team fits a defined project or a scaling phase where you need senior output quickly without the recruitment cycle or the redundancy risk if scope changes.
Most growing UK software businesses end up running more than one model at once: a small permanent core for institutional knowledge, plus a dedicated team or agency for the work that scales up and down with the roadmap.
AyTech note: The safest projects start with a narrow, measurable workflow, then expand after real users prove the value. This keeps budgets controlled and gives Google, buyers, and stakeholders clearer proof of expertise.
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