Agency vs Freelancer vs In-House: The Real Cost

The short answer: an agency for a project with a clear start and end, a freelancer for a small, well-bounded task, and your own team for a product that changes every day. For most small and mid-sized companies the most balanced setup is a mix: an in-house product owner and an external build team.

These three models are usually compared on price, and the comparison usually goes wrong in the same place: treating an in-house developer's cost as their salary. This post builds that cost line by line from official Turkish statistics and the legislation in force. We state every assumption, so you can swap in your own numbers and run the same calculation.

Choosing an agency itself — writing the scope, comparing proposals, verifying the firm — is covered in how to choose a digital agency. This post asks the question that comes before it: should you buy the work in or build the capability inside?

The right model by situation

"Usually" is doing real work in that table. Five questions settle it. How long will the work last? How fast must it start? How certain must the budget be? What happens if one person leaves? Where should the knowledge live?

The three models side by side

The last row is the least discussed and the most expensive. In all three models, if code and knowledge are not set up properly the result is the same: whoever leaves takes the knowledge with them. How to prevent that in the contract is covered in who owns the code.

What an in-house developer really costs

At 2026 rates, once leave and holidays are taken out, 100 TRY of gross pay costs an employer about 147 TRY per productive month. In the first year it is about 159 TRY. That figure is the output of a model. Below we give the source of every component and mark which ones are assumptions.

Starting point: TurkStat's personnel cost

To avoid inventing a salary, we start from the average TurkStat measures. In 2025, total personnel cost for 143,048 paid employees in computer programming activities (NACE 62.1) was TRY 262.6 billion (TurkStat, Annual Industry and Service Statistics, 2025).

Divided by paid employees and by 12, that is about TRY 153,000 per employee per month; the arithmetic is ours. For the wider division (NACE 62, including consultancy) the same figure is about TRY 148,700. TurkStat defines personnel cost as gross payments to staff plus employers' social security costs (TurkStat metadata).

So the figure already includes social security, but not severance accrual, leave or the time it takes to hire. The rest of the model calculates that gap.

The formula

Cost per productive month = (Gross pay × (1 + employer social security rate) + severance accrual) × 12 ÷ productive months

Equipment, software licences, office space and recruiting fees are not in the formula; add them on top if they apply.

Where each component comes from:

• Disability, old-age and survivors' insurance: the employer's share has been 12 percent since 1 January 2026, up from 11 percent in 2025, following Law No. 7566 (Law No. 5510, Art. 81).
• General health insurance: employer's share 7.5 percent (same article).
• Short-term insurance branches: 2.25 percent, paid entirely by the employer (same article).
• Unemployment insurance: employer's share 2 percent (Law No. 4447, Art. 49).

The total employer share in 2026 is 23.75 percent. For private-sector employers, the Treasury covers 2 points of the employer's old-age insurance share. The conditions are in the law: filings on time, premiums paid on time and no debt to the Social Security Institution. If they are met, the rate falls to 21.75 percent. The discount was 4 points before 2026; in manufacturing, 5 points apply until the end of 2026 (Law No. 5510, Art. 81(ı) and Provisional Art. 108).

• Severance pay: 30 days' wages for every full year of service (Law No. 1475, Art. 14). That means accruing one twelfth of gross pay each month. It is paid only in the cases the law lists, such as dismissal without just cause or retirement. You cannot know at hiring whether it will be due.
• Annual leave: at least 14 days for one to five years of service, earned after one year of work (Labour Law No. 4857, Art. 53).
• Public and religious holidays: 15.5 days a year in the law (Law No. 2429). Some fall on weekends, so we assumed 12 working days.
• Ramp-up: we assumed a new developer works at half output for the first three months. That removes 1.5 months from year one. Your codebase and documentation will shorten or lengthen it.

The calculation, on the TurkStat average

Applied to the TRY 153,000 TurkStat average, the model looks like this:

Step by step:

1. Taking the 2025 employer rate (22.75 percent, without the discount) out of TRY 153,000 gives an estimated gross pay of about TRY 124,600.
2. Severance accrual adds about TRY 10,400 a month: about TRY 163,400 a month, or about TRY 1.96 million a year.
3. A month has 21.7 working days on average. Taking out 14 days of leave and 12 of holidays leaves 10.8 productive months a year. Cost per productive month is about TRY 181,500.
4. In the first year there is no annual leave entitlement yet, but there is the 1.5-month ramp-up. Productive months fall to 9.9 and the cost rises to about TRY 197,100.

The lira figures are 2025 values, not today's salaries. What carries over is the ratio: for an average developer, cost per productive month is about 1.46 times gross pay, and 1.58 times in the first year. At 2026 rates the multipliers are 1.47 and 1.59; with the Treasury discount, 1.45 and 1.57.

What the formula leaves out

Some real costs are not in the formula: a computer, software licences, office space, a job ad or recruiter fee. The one most often forgotten is the time of whoever manages the developer. We could not find a reliable Turkish average for these, so we give no number. Add your own.

One more point: a single in-house developer is as much a key-person risk as a single freelancer. When that person leaves, the code is left alone with no one who knows it. A company building its own team should really be costing a team of at least two.

Hiring: finding the person is a cost too

The second cost of building a team is the time it takes to find someone. According to TurkStat's 2026 survey, only 6.4 percent of enterprises with 10 or more employees hired or tried to hire an ICT specialist in 2025. Of those that tried, 31.7 percent reported a difficulty (TurkStat, ICT Usage Survey in Enterprises, 2026).

Of those that had difficulty, 82.6 percent cited candidates' salary expectations and 71.0 percent a lack of relevant work experience. That also explains why the cost above can run higher than the average: a candidate with the experience you need may not accept the average salary.

We could not find a published, reliable time-to-fill figure for Türkiye, so we did not add the vacant months to the cost. No money goes out while the seat is empty, but no work moves either; for a project with a launch date, that is the real cost.

Freelancers: not the cheapest option, the narrowest

A freelance developer is often the fastest, lowest-overhead option for a well-bounded task. The problem is not price but breadth. One person cannot go equally deep in design, back end, mobile, testing and release.

The second problem is key-person dependency. In Türkiye, 93.5 percent of IT services firms already have one to nine people, averaging 1.7 people per firm in that group (TurkStat, 2025). The line between a "firm" and a "freelancer" is thinner than it looks. We break that data down in how to choose a software development company.

If you work with a freelancer in Türkiye, two legal and tax points matter:

• Withholding tax: under Article 94 of the Income Tax Law, a company paying someone who issues a self-employment receipt must withhold income tax at payment (Law No. 193, Art. 94). If the developer invoices through a sole proprietorship, the treatment differs. Ask your accountant.
• Dependent work: the Labour Law defines an employment contract as one party undertaking to work in a dependent capacity and the other to pay wages (Law No. 4857, Art. 8). If a freelancer is working your hours, on your instructions and only for you, the relationship starts to resemble employment. At that point, take legal advice.

A freelancer works well under three conditions. The job is split into small deliverable pieces, the code lives in your repository from the start, and someone on your side can check the work. Without that third condition, you only learn the quality of what you bought when something breaks.

Agencies: what are you actually buying?

Working with an agency is not a way to avoid paying salaries. It is a way to buy senior time for the length of a project without building a permanent team. An agency's price includes the team's cost, the agency's own overhead and its margin. Compared hour by hour, it will look more expensive than staff.

In return you get three things. A team that starts without a hiring period. Continuity that does not hang on one person. And, under a fixed-price contract, the risk of going over budget moves to the vendor. When the work ends, the fixed cost ends too.

The risk is that the agency can keep the knowledge. If the code sits in its account and the documents in its folders, you start from zero the day you leave. So the real question when choosing an agency is not price but what stays with you at handover.

Budget ranges by project type are in mobile app development cost.

Hybrid: in-house product owner, external build team

In our view this is the most balanced setup for most small and mid-sized companies. One person inside owns the product; an external team does the design, development and releases.

The person inside does not need to be a developer. Their job is to:

• Set priorities: what gets done this month and what waits.
• Accept each release or send it back.
• Know the users and the business, and give the external team that context.
• Represent the company as the owner of the code repository, servers, domain and store accounts.

The setup has two conditions. First, code and accounts are opened in the company's name from the start. Second, every delivery is documented. With both in place, changing the external team is a handover, not a project.

As a company grows, the balance shifts towards staff. In the same TurkStat survey, 73.3 percent of enterprises with 250 or more employees had an ICT specialist, against 10.8 percent of those with 10 to 49 (TurkStat, 2026). The hybrid model is often a waypoint: as the product grows, so does the team inside.

When an agency — us included — is the wrong choice

Caliency is an agency; we build mobile apps and websites. We give a fixed price once the scope is written. The code repository and accounts are opened in the client's name from day one, and we do not hand the work to another firm or a freelancer. Even so, we are the wrong choice when:

• Software is your core product. The knowledge to develop it every day has to build up inside your company. We can build the first release, but in the long run you need your own team.
• You need small changes every day. The right answer to daily, unpredictable work is staff; a project contract is not built for it.
• The task is small and one-off. For fixing a form or wiring up a single integration, a good freelancer is faster and cheaper.
• The team has to be physically with you. We work remotely.

If one of these is your situation, we will say so on the first call.

What we did not account for

• The TurkStat average is not a salary. It mixes juniors and seniors, developers and sales or admin staff. The person you are looking for may cost something quite different.
• The lira figures are from 2025. The rates follow 2026 legislation; the lira level does not.
• We backed out gross pay at the undiscounted rate. Some employers use the Treasury discount, so actual average gross pay may be slightly higher.
• We did not model the contribution ceiling. From 2026 the ceiling on insurable earnings is nine times the floor (Law No. 5510, Art. 82). Above it, the employer's effective rate falls.
• Holidays and ramp-up are assumptions. Twelve working days of holidays and three months at half output are our assumptions; replace them with your own.
• We did not model agency or freelancer prices. We found no reliable Turkish price data with a published method, so we left it blank.

Frequently asked questions

Should I hire an agency, a freelancer or build an in-house team?

It depends on the work. A project with a written scope and a clear end suits an agency or a fixed-price external team. A small, well-bounded task that you can check yourself suits a freelancer. A product that changes every day and sits at the core of the company needs your own team. For most small and mid-sized companies the most balanced setup is an in-house product owner with an external build team.

How much does an in-house developer really cost an employer in Türkiye?

Noticeably more than the salary. At 2026 rates the employer's social security share is 23.75 percent of gross pay, or 21.75 percent with the Treasury discount. Severance accrual adds roughly one month's gross pay for every year. Once leave and public holidays are taken out, 100 TRY of gross pay works out to about 147 TRY per productive month. In the first year it is about 159 TRY. Those last two figures come from a model built on our own assumptions.

What is the biggest risk of working with a freelance developer?

Key-person dependency. A freelancer is one person; if they fall ill, take another job or stop working, nobody else knows the code. You manage that by keeping the code in your own repository from day one, asking for written documentation and splitting the work into small deliverable pieces. If the relationship turns into dependent, full-time work in practice, it starts to look like employment in law, so take legal advice.

When does it make sense to build your own software team?

When software is the company's core product, when changes are needed every week and when there is enough work to keep at least two developers busy full time. A single in-house developer is as much a key-person risk as a single freelancer. In TurkStat's 2026 survey, 73.3 percent of enterprises with 250 or more employees employed an ICT specialist, against 10.8 percent of those with 10 to 49.

How do you set up a hybrid model?

An in-house product owner who knows the business and the users, and an external build team. The product owner sets priorities, accepts each release and represents the company as the owner of the accounts and the code repository. The external team does the design, development and releases. For this to work, the code has to live in the company's repository from the start and every delivery has to be documented.

In short

An in-house developer's cost is not their salary. At 2026 rates the employer's social security share is 23.75 percent of gross pay. Add severance accrual, leave and holidays, and cost per productive month comes to about 1.47 times gross pay, or 1.59 times in the first year. On TurkStat's 2025 average and 2025 rates, that is about TRY 181,500 per productive month.

Even so, outsourcing is not always the answer. If software is your core product, build your own team. For a small task, a freelancer is enough; for a project with a start and an end, an agency. For most companies in between, the best fit is an in-house product owner with an external build team.

If you would like to work out where your project sits, get in touch. If we are not the right choice for it, we will tell you that too.