For founders

How much does it cost to hire an engineer?

The agency fee is the number founders compare and the smallest one in the calculation. Here is where the money actually goes, including the two costs that never make it into the spreadsheet.

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A senior engineer in the US costs their base salary plus roughly a quarter to a third again in payroll taxes, benefits, equipment and software. Finding them costs either founder time or a fee, and agency fees are commonly quoted at 20 to 25 percent of first year base. Those are the numbers that get compared. The two that decide whether the hire paid off are the ones nobody writes down: what the empty seat costs every month it stays empty, and what a wrong hire costs when you have to undo it.

The salary is not the salary

Whatever number goes in the offer letter, the company pays more. Employer payroll taxes, health coverage, a laptop, the software the person needs on day one, and the share of an office or a stipend if you have one. Depending on where you are and what you offer, the loaded cost lands somewhere between 1.25 and 1.4 times base. For the base itself, levels.fyi is the closest thing to a public price list. Read the specific companies you compete with rather than a national average.

For an early team this matters less as a percentage and more as a planning error. Founders budget the base against runway, then discover the real burn a month later. If you are modelling a hire against months of runway, use the loaded figure.

What finding them costs

There are three ways to run a search and all of them cost something.

You do it yourself. No fee. The cost is founder hours, and at seed stage those are the most expensive hours in the company. A serious search for one senior engineer is not a weekend, because the strongest engineers do not apply to anything. It is sourcing, writing to people who owe you nothing, chasing replies, scheduling, and running a loop, over weeks, while you are also building and raising.

You hire a recruiter in house. That works once you are hiring continuously. For one or two roles a year you are paying a salary to keep a pipeline warm that you do not have enough volume to fill.

You pay a fee. Contingency agencies are commonly quoted at 20 to 25 percent of first year base, paid when someone starts. Retained search splits a similar or larger fee into stages and gets paid whether or not you hire. The difference that actually matters is not the percentage, it is whether the person doing the search knows the market well enough to be worth it.

The seat you have not filled

A senior role open for two months means two months where the work that role was meant to do does not get done, and two months is close to the average, as we set out in where the five to seven weeks actually go. On an early team that is rarely abstract. It is the integration that slips, the customer who waits, the founder writing code at night instead of selling.

No invoice arrives for any of that, so it rarely registers as a cost. It is usually the biggest one in the calculation. If you opened the role at all, the delay has a price. A search that saves a few points on the fee and runs six weeks longer has not saved you anything.

The hire you have to undo

The expensive outcome is not paying a fee. It is hiring the wrong person, watching the team slow down for two quarters while everyone hopes it turns around, then paying severance and starting again with less runway and a worse mood in the room.

A weak senior hire does not arrive with an alarm attached. The damage shows up as things getting slower, standards getting softer, and the next great engineer being harder to convince. Priced honestly, that costs more than any fee in this article.

So what should you spend

Enough to get the right person, and no more than that. If you know the people you want and they will take your call, run the search yourself and pay nothing. If you do not, the question is whether the person you are paying actually shortens the distance to someone you would not otherwise have met.

The question to ask about any fee is whether the introduction was one you could have made yourself.