White-Label Capacity vs Hiring a Developer: When Each Makes Sense

Three projects land in the same six weeks. Your two developers are already full, one of them is muttering about weekends, and the account manager has just promised a demo. Somebody says the obvious thing: we should hire someone.

Maybe. A salary is a fixed cost, and an agency pipeline is not a fixed thing. That mismatch is the whole decision, and it is worth doing the arithmetic before you write a job ad, because the job ad commits you to a year of payroll on the strength of a quarter of visibility.

We sell white-label capacity, so treat any conclusion we reach with the suspicion it deserves. What follows is the maths with the statutory numbers sourced, so you can run it against your own pipeline and disagree with us on evidence. There is a version of this decision where hiring is plainly the right answer, and it is further down the page.

What a developer costs before anyone writes a line of code

Start with a salary of £55,000. That figure is an assumption, not a market rate. Substitute whatever you would actually offer, because the shape of the result does not change.

Employer National Insurance for the 2026 to 2027 tax year is 15% of earnings above a secondary threshold of £5,000 a year, which on that salary is £7,500. The automatic enrolment pension minimum adds 3% of qualifying earnings, and qualifying earnings means the slice between £6,240 and £50,270, so that is 3% of £44,030, or £1,321. Salary plus National Insurance plus pension comes to £63,821.

That is before a laptop, a desk, software licences, the recruiter's fee, and the hours you personally spend interviewing and then onboarding. It is also before the Employment Allowance, which is worth up to £10,500 of employer National Insurance in 2026 to 2027 if you qualify. If you already run a payroll, the allowance is probably already applied against your whole wage bill rather than sitting spare for a new hire, and there are conditions attached, including a rule that a single-director company cannot claim where that director is the only employee liable for secondary National Insurance. Check where yours has gone before you count it as a discount on this decision.

The number that settles this is utilisation, not salary

A year has 52 weeks. Statutory paid holiday is 5.6 weeks, which GOV.UK also expresses as at least 28 days for a full-time worker, so 46.4 working weeks remain. At 37.5 hours a week, and that is another assumption you should replace with your own, you are paying for roughly 1,740 hours.

Nobody bills 1,740 hours. There is sick leave, internal work, the pitch that did not convert, the standup, the half day lost to a client who rescheduled. Divide the £63,821 by the hours you genuinely invoice and the picture sharpens.

Share of paid time actually billed	Billed hours a year	Cost per billed hour
100%, which does not exist	1,740	£36.68
85%	1,479	£43.15
70%	1,218	£52.40
60%	1,044	£61.13
50%	870	£73.36

Every row is division you can repeat in a spreadsheet in about a minute. The inputs are either statutory or flagged as assumptions, which is deliberate, because the useful part of this exercise is not our number, it is yours.

Read the table honestly and the answer falls out. An agency that can keep a developer genuinely busy is buying hours cheaply, and should hire. An agency that thinks it can and then finds itself living in the bottom rows has quietly bought the most expensive hours in the building, and has bought them for a year at a time.

A hire is a commitment you cannot unwind in a quarter

The cost of being wrong is not symmetrical. Statutory redundancy pay applies once someone has two years of service, calculated as half a week's pay for each full year served under 22, a week's pay for each full year from 22 to 40, and a week and a half for each full year at 41 or older, with service counted up to 20 years. From 6 April 2026 a week's pay is capped at £751 for this calculation and the statutory maximum is £22,530.

Those numbers are smaller than most people expect, which is not the point. The real exposure sits in the months before you admit the pipeline changed: the salary you keep paying while you go looking for work to justify it, the discounted project you take because an idle developer is worse than a cheap one, and the fact that a person's livelihood now depends on your sales forecast being right. That last one deserves more weight than a spreadsheet gives it.

When hiring is obviously the right answer

Hire when the demand is not lumpy. If you can look back at twelve months and see development work that never dipped below one person's capacity, and you can see the same in your signed pipeline rather than your hopeful one, the table above is on your side and you should stop reading.

Hire when the capability is what clients buy you for. If your positioning is that you build the hard thing, the hard thing belongs in house. Renting your own differentiator is a strategic mistake that no hourly rate makes up for, and any capacity partner telling you otherwise is selling.

Hire when the work needs someone in the room every day, in client conversations, in the messy half-formed part of a project where requirements get argued into shape. External capacity is good at defined work. It is a poor substitute for a person who sits in your Monday meeting and knows why the client is nervous.

Hire, too, when you are building something you own rather than delivering for clients, because the institutional knowledge compounds and you want it to stay with you.

When capacity is the better buy

The opposite case is narrower than vendors pretend, and it is mostly about shape rather than price. Overflow capacity earns its keep when the work arrives in bursts, when a project needs a specialism you will use twice this year and never in between, when a fixed deadline has to be met and the alternative is missing it, and when you want to test whether a new service line sells before you attach a salary to it.

It also covers the awkward gaps: someone on parental leave, a resignation with a bad handover, the wait between a signed offer and a new hire's first day while they work out whatever notice they owe. Those are real and they are temporary, which is exactly the case a variable cost is for.

Our own band is €35 to €55 an hour for senior work, and we publish it rather than making you ask. We are deliberately not converting that into pounds here, because we would be inventing an exchange rate to win an argument. Take the cost per billed hour you calculated above, compare it to whatever any partner quotes you, and remember you are comparing a number you can switch off in a month against one you cannot.

How to test the answer without betting a project on it

If you land on capacity, the sensible next move is small. We run a two-week paid trial sprint precisely because the first engagement is where a partner is either fine or a disaster, and neither of us can tell from a call. Give it a real piece of work with a definition of done, watch how the questions arrive, and see whether the code reads like something your team could maintain after we leave.

What you are testing is not raw ability, it is friction. Does the work land in your repositories and your project tool without a translation layer. Do you hear about a blocker on day two or on day nine. Does anything need re-explaining. If a partner cannot pass a two-week test at low stakes, you have learned that cheaply, which is the entire point.

Our longer piece on how to choose a white-label development partner in the EU covers the selection criteria in more detail, including how the paperwork should handle your client relationships. If you would rather see the same calculation from the other side of the table, we ran it recently for an SMB deciding whether to hire a data entry clerk or buy the software instead, and the logic is identical even though the job is not.

If your pipeline is genuinely lumpy and you want to know what a specific project would cost as capacity rather than as a hire, tell us what it involves and you will get a straight answer, including the answer that you should hire instead. Details of how we work with agencies are on the partners page.