Freelancer vs. Full-Time Developer: What Montreal & Toronto Companies Need to Know
Most founders do the math wrong.
They see a $85,000 salary and think that’s the cost. It isn’t. By the time you add payroll taxes, benefits, recruiting fees, equipment, onboarding time, and the 3–4 months it takes to even find someone — you’re often looking at $140,000 to $160,000 for a single mid-level developer in Toronto over the first year.
This post breaks that down with real Canadian numbers, explains when freelancing wins (and when it doesn’t), and ends with a live calculator so you can run your own scenario.
The Hidden Costs of a Full-Time Hire
Let’s use a real example: a mid-level developer in Toronto, hired for 12 months.
Base salary: $85,000 (Glassdoor 2025 avg: $85,180)
| Cost Item | Amount | Notes |
|---|---|---|
| Base salary | $85,000 | Market rate, Toronto |
| Payroll taxes (CPP + EI) | $6,996 | 8.23% employer burden — Canada.ca |
| Benefits (health, dental, vacation) | $15,300 | ~18% of salary |
| Recruiting fee | $18,000 | ~21% of annual salary — Robert Half Canada |
| Equipment & setup | $4,000 | Laptop, licenses, onboarding tools |
| Onboarding productivity loss | $10,625 | 3 months at 50% capacity |
| Time-to-hire cost | $24,792 | 3.5 months of lost work before they start |
| Total Year 1 | $164,713 |
That $85,000 hire costs you closer to $165,000 in the first year — before they’ve shipped a single production feature.
And that’s if everything goes smoothly.
The Numbers Behind the Numbers
Payroll taxes: Canada.ca publishes the employer CPP2 + EI burden at roughly 8.23% of insurable earnings. This is money that leaves your account every payroll cycle — it just doesn’t show up on the offer letter.
Benefits: Industry benchmarks from Morneau Shepell and Mercer Canada consistently place health, dental, and vacation benefits at 15–22% of base salary. We use 18% as a conservative midpoint.
Recruiting: Robert Half Canada’s annual salary guide pegs recruiting fees at 20–25% of first-year salary for a direct hire. Even if you DIY it on LinkedIn Recruiter, you’re paying for someone’s time to screen, interview, and close.
Time-to-hire: Paraform and Huntly’s 2024 tech hiring data shows an average of 36–41 days to extend an offer — but that’s from an active candidate pool. From the moment you decide to hire to the moment someone is actually productive, you’re typically looking at 14–18 weeks (sourcing + interviewing + notice period + ramp-up).
Onboarding loss: The AIHR 2026 report puts average time to full productivity at 6–7 months. We use 3 months at 50% output as a conservative estimate — meaning you’re essentially paying full salary for half the output during that window.
The Freelancer Equation
Hiring a senior freelancer at $130/hr sounds expensive. Until you do the math.
For a 6-month engagement at 40h/week in Toronto:
- Freelancer cost: $130 × 40h × 26.8 weeks = $139,360
- Full-time hire cost (same 6 months): ~$112,000+ in salary, taxes, benefits — plus $47,000+ in one-time costs = ~$159,000
The freelancer costs less over that window — and they started working in week one instead of week sixteen.
What you’re not paying with a freelancer:
- No employer CPP or EI
- No benefits package
- No recruiting fee
- No equipment budget
- No 3-month ramp-up loss
- No severance if the project ends early
What you are paying:
- A higher hourly rate that reflects these embedded costs
Experienced freelancers price in their own overhead. That’s the deal. You pay more per hour and less in total.
When to Hire Full-Time
Freelancing isn’t always the answer. Here’s when bringing on an employee makes sense:
The role is permanent and ongoing. If you need someone to own a core system for 3+ years with no defined endpoint, the math eventually flips. The break-even point for a senior developer in Toronto — where ongoing freelancer costs exceed the fully-loaded hire cost — typically arrives around 18–24 months of full-time engagement.
You need deep institutional knowledge. Some roles require months of context-building that doesn’t travel well. Internal tooling specialists, long-term platform engineers, and anyone owning compliance-sensitive systems often benefit from the continuity of full employment.
Culture and team integration matter. If you’re building a product team and need someone embedded in sprint ceremonies, company rituals, and long-term roadmap ownership — a full-time hire makes more sense than a series of contractors.
You have volume. The recruiting fee, equipment, and onboarding costs are fixed. If you’re hiring five developers at once, those per-head costs become easier to absorb.
When Freelancing Wins
Projects with a defined scope or timeline. Launches, MVPs, migrations, redesigns — these have a start and end. A freelancer or agency handles the work and exits cleanly without severance conversations.
Specialized skills you need once. You don’t hire a full-time motion designer for a product launch video. The same logic applies to AI engineers, security auditors, performance specialists, or mobile developers you need for one cycle.
Speed is a constraint. If you need someone productive next week — not in 16 weeks — freelancing is the only rational option. The average in-house hire in tech takes 36–41 days to offer, let alone start and ramp up.
Budget certainty matters. Freelancers are scoped. You know the cost before you commit. Full-time hires carry variable costs (raises, benefits changes, unanticipated HR situations) that compound unpredictably.
You’re not sure what you need yet. If the role is still being defined, a freelancer lets you learn what the position actually requires before you write a permanent job description.
The Decision Framework
Before running the calculator below, ask yourself three questions:
- How long will this work last? Under 18 months → lean freelance. Over 24 months → run the hire math.
- How fast do I need someone? If “soon” means weeks, not months → freelance only.
- Is this ongoing or project-based? Ongoing core work → hire. Defined deliverables → freelance.
If your answers are mixed, the calculator will show you the actual cost difference for your specific situation.
Run Your Numbers
The calculator below uses real Canadian market data — salary benchmarks from Glassdoor, hourly rates from ZipRecruiter and Toptal, and cost multipliers from Canada.ca and Robert Half. Adjust the inputs to match your situation.
Rates and salary benchmarks reflect 2025–2026 Canadian market data. Freelance hourly rates represent experienced professionals; junior contractors may be 20–30% lower. All figures in CAD.
Sources
- Glassdoor Canada (2025) — Developer salary benchmarks, Toronto & Montreal
- Canada.ca — CPP2 and EI employer contribution rates
- Robert Half Canada 2025 Salary Guide — Recruiting cost benchmarks
- Paraform / Huntly Tech Hiring Report (2024) — Time-to-hire in technology
- AIHR Human Capital Trends Report (2026) — Onboarding productivity timelines
- ZipRecruiter Canada (2025) — Contract developer hourly rate ranges
- Toptal / Upwork Rate Index (2025) — Senior freelance developer benchmarks
True Cost Calculator
Compare the real cost of a full-time hire vs. a freelancer/agency for your specific situation.
Full-Time Hire
Total cost over 6 months
Freelancer / Agency
Total cost over 6 months
Time to Start
Break-Even Point
Hiring becomes cheaper after 9 months
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