Short Answer
Hire when you have enough continuous development work to fill a full working week, every week, and the work is central enough to your business that you want the knowledge living in-house. Use a retainer when the work is real but intermittent, when you need a breadth of skills no single person carries, or when you cannot afford the risk of your entire technical capability resigning in one conversation. Many businesses that agonise over this are not choosing between two good options. They are choosing between a hire they cannot keep busy and a retainer they have not priced properly.
What a Hire Actually Costs
The advertised salary is the smallest honest number. A mid-level UK developer at £45,000 to £55,000 costs closer to £60,000 to £70,000 once employer National Insurance, pension, equipment, software, and holiday cover are counted. Recruitment adds a fee or weeks of your own time. Then there is the cost nobody budgets: management. A developer without direction produces code, not outcomes, and someone in your business has to provide that direction, review the output, and make the technical calls a lone developer should not make alone.
The deeper exposure is concentration. One developer means one person who knows how everything works. Their holiday is your freeze on releases. Their notice period is your migration project. This is not an argument against hiring. It is an argument for hiring only when the role is big enough to justify eventually becoming a team.
What a Retainer Actually Costs
A retainer buys a defined amount of capacity each month at a known price, drawn from a team rather than a person. The day rate looks higher than an employee’s, and on a pure per-hour comparison it is. The comparison misleads because you are not buying hours. You are buying finished work with no recruitment, no management overhead, no idle time between projects, and no single point of failure.
The weaknesses are real too. An agency is never as immersed in your business as an employee sitting in your meetings. Response times are governed by an agreement rather than by walking over to a desk. And a bad agency on retainer is worse than no agency, because the monthly invoice keeps arriving whether or not momentum does.
Where Each One Wins
Continuous product development, where the software is the business, favours the hire. Someone should wake up every day owning that codebase.
Operational software, the systems that run a business rather than being the business, favours the retainer. This work arrives in bursts: an integration this quarter, a reporting change next, months of quiet in between. Paying a salary for burst work means paying for the quiet.
Breadth favours the retainer strongly. A typical year of business systems work touches backend, frontend, infrastructure, integrations, and security. No single developer is strong across all of it, but a small agency team collectively is.
Speed of starting favours the retainer. A hire is months away on a good run. A retainer starts on the first of the month.
The Test We Suggest
Write down the development work you confidently expect over the next six months. Not hopes, commitments. If it fills fewer than three days a week, a full-time hire will spend a large fraction of their expensive time inventing work or gold-plating what exists. If it fills five days a week and the list keeps growing, hire, and treat any retainer as the bridge that gets you there.
How We Approach This
Retained development is one of the core ways we work: support retainers cover the ongoing capacity model, and the same team handles the larger builds a retainer sometimes grows into, from business automation to custom software. We have also told prospective clients to hire instead, when their workload genuinely justified it, and helped them define the role. If you want an honest read on which side of the line your workload falls, start a conversation. For adjacent versions of this decision, see agency vs in-house for the full-team comparison and outsourcing vs your first developer hire if this would be your first technical capacity of any kind.
