The four common pricing models
1. Time-and-materials (T&M), most common
- Hourly rate × actual hours worked
- Monthly invoice
- Best fit: ongoing product work with variable scope
- Risk: cost uncertainty month-to-month
2. Fixed monthly retainer
- Flat monthly fee for X engineers committed to your team
- No hour-tracking overhead
- Best fit: long-term commitments, predictable workload
- Risk: paying for capacity you don't use during slow periods
3. Capped T&M (T&M with NTE)
- T&M up to a not-to-exceed cap per month
- Caps overruns; preserves time-and-materials transparency
- Best fit: budget-constrained teams with variable workload
4. Outcome-based (rare in pure staff aug)
- Hourly rate tied to delivery milestones
- More common in outsourcing than staff augmentation
- Best fit: well-defined scope with clear acceptance criteria
Rate drivers
- Seniority: junior $30–$50, mid $40–$65, senior $55–$95, staff $80–$120
- Stack: mainstream stacks (React, Node) cheaper than niche (Rust, Elixir, Solidity)
- Geography: CEE 30–50% below DACH/UK; Iberia 20–35% below
- Engagement length: 12-month commitments often clear 5–10% volume discount
What should be included in the rate
- Engineer compensation and benefits
- Recruiting and vetting amortisation
- HR and accounting overhead
- Standard PTO (typically 20 days/year)
- IP-transfer legal coverage
What's typically not included
- Software licences (IDEs, monitoring tools above standard)
- Cloud infrastructure
- Travel (billed at cost + 10–15%)
- Overtime above 45 hours/week (typically 1.5×)
Red flags in any quote
- Blended single rate with no breakdown
- Setup or recruiting fees on top of rate
- Mandatory minimum hours above 160/month
- No published rate sheet to validate against
