How To Measure ROI After You Hire Dedicated Developers

ByBNW Staff

Everyone in the market, whether running a business or owning a tech company, is interested in knowing the return on investment (ROI) they will see after deploying a particular product or app, or even when hiring dedicated developers. This is how things work. Let’s understand this with an example: you nurtured a seed until it grew into a sapling, and then into a full-grown plant. The result: the plant, after attaining its maturity stage, will start giving you flowers, fruit, clean air, and positive surroundings. That’s the fruit you will reap after nurturing a seed. Similarly, if you want to know about the ROI you will receive after hiring developers, you are in the right place. Stick with this blog to find out about the same. 

What Does ROI Mean When You Hire Dedicated Developers?

The most obvious component is cost efficiency. When you hire mobile app developers on a dedicated model, you avoid the overhead of full-time employment: recruitment fees, office space, hardware, benefits, and training costs. You pay only for the expertise and hours you actually need, which can reduce development costs by 40–60% compared to building an in-house team from scratch. 

In simple terms, if we answer this question for you, it is the measure of the business value. Here, you can think of it as the value that dedicated teams bring to the project. Whether the project on which the dedicated teams are working is scalable enough, or whether you can speed up the time to market and deploy quick development cycles or not.

Costs You Should Include Before Calculating ROI

If you are working on a project, you should try to ascertain even the smallest costs you incur. A true and fair representation of ROI will not be possible if you ignore any one of the criteria. For your reference, we have listed the necessary costs.

Direct Costs

You can say direct costs are expenses or costs that directly affect your project’s execution and are visible. Labor costs, i.e., salary or hourly wages of your employees and workers. Material costs are expenses incurred in purchasing raw materials and equipment for your project’s completion. Licensing and subscription costs for project tasks, such as design software. All of these are commonly known as direct costs you cannot avoid.

Indirect Costs

Indirect costs are also known as overheads. What do we mean by the term indirect cost? These costs or expenses are known to support the project but are not directly linked to it. To name a few, administrative costs such as HR and accounting are a part of it. Utility costs (such as electricity and repairs) and the cost of acquiring an internet connection are examples. These are all considered indirect costs that are not directly visible to you but are essential to the project’s completion. 

Risk-Associated Costs

If you are working on a project, you cannot avoid the associated risks. These are what we call risk-associated costs, which also add to your overall costs, especially when calculating ROI. If we enumerate them, these are contingency funds allocated for unforeseen circumstances, insurance costs to reduce financial risk and burden, and failure and rework costs, just in case your project fails or the existing project plans require rework.

Long Term Costs

Some costs are never-ending; they continue even after your project reaches the final delivery stage. Such costs shall be segregated to avoid any scope for misrepresentation or miscommunication. To name a few, maintenance costs include bug fixes, technical support, or product maintenance. Upgrade costs are incurred to keep the project relevant in the future, and depreciation costs are accumulated on the value of equipment or assets over time.

Key Metrics to Measure ROI After You Hire Dedicated Developers

Delivery efficiency, the quality of deliverables, and their impact on the business are key metrics for measuring ROI after you hire dedicated developers. It’s a complete ecosystem that directly links technical performance to the bottom line. 

How to Calculate ROI

ROI for your business can be calculated by taking your project’s actual income into account and subtracting the expenses incurred. The formula for calculating ROI is as follows, which will help you make the right comparison: 

ROI = (Net Profit / Cost of Investment) x 100

This is the generic formula, but if you want the calculation in terms of project management, the calculation is somewhat different, which is as follows: 

ROI = [(Financial Value – Project Cost) / Project Cost] x 100

So, now you know the formula; let’s understand its implication with the help of a formula. 

Suppose you have the opportunity to purchase 100 bars of candy for $ 2 per bar. What will you do? Obviously, you will plan to sell them to a grocery store for $3/ per bar. This is your estimated selling price, and to transport it, you will incur transportation costs of around $100. To ensure that your business model is profitable, you need to match up your total expenses with expected revenue, which will be: 

  • Expected Revenues = 1,000 x $3 = $3,000
  • Total Expenses = (1,000 x $2) + $100 = $2,100

Now, to ascertain the net profit, you need to deduct expenses from your expected revenue.

Net Profit = $3,000 – $2,100 = $900

Since you know the net profit, calculating ROI is a bit easier. For that, just put the figures in the above-mentioned formula to get the result, which will be :

ROI = ($900 / $2,100) x 100 = 42.9%

Tools That Help Measure Development ROI

When compiling this list, we included a variety of tools across software engineering intelligence tools, developer survey tools with custom reporting features, and more traditional developer productivity tools to capture the full range of options you have for boosting, measuring, and improving developer productivity. This is built on the understanding that well-supported, nimble developers will be more productive. Here are the top 3 tools you can consider. 

Port

Port, also known as an internal developer portal, is a centralized platform that brings together all the tools your engineers use throughout the software development life cycle (SDLC). This platform is known for combining engineering expertise with developers’ experience. As a result, you can evaluate the issues that create delays and bottlenecks and address them altogether. 

The list of features involved in it is: 

  • Engineering 360
  • Standards
  • Self-service actions 

Instead of adding another tool that will only increase your sprawl, an internal developer portal offers a better option: centralizing your tools in one place and paving the way for true productivity and efficiency.

DX

DX is also an engineering platform designed for developers, with a vision to facilitate the collection and analysis of sentiment data. Instead of providing a holistic view of the developer experience, it offers a set of tools to improve it. Talking about DX’s features, you will receive: 

  • Experience data
  • Data lake
  • Benchmarking
  • DX AI

Here, the vision is to make recommendations for cultural improvements. 

JellyFish

JellyFish is another software engineering tool you can integrate with your existing toolset to organize metadata across your pipeline and receive actionable insights. As a result, its focus is on developer productivity, which is secondary; you will still need to purchase or build separate systems to address the findings and deliver better, targeted experiences. The key features involve: 

  • Engineering management
  • DevFinOps
  • DevEx

The primary goal is aimed at engineering managers who are willing to push their teams closer to the business. 

Conclusion

There are several ways to measure ROI, but what matters is the approach you use. In this blog, we provide all the information you need to track the return on investment if you are planning to hire dedicated developers. Furthermore, we have listed the tools you can use to calculate ROI. 

FAQs

   1.Enumerate the basic formula to calculate developer ROI?

Ans: (Financial Cost-Investment Cost) / Investment Costs* 100

  2.How should I account for intangible benefits?

Ans: For accounting for intangible benefits, you need to keep these points in mind:

  • Reduced Downtime: Multiplication of hours of prevented outages and the average cost of downtime per hour.
  • Higher Code Quality: Fewer post-release bugs and quicker customer issue resolution.
  • Agile: The flexible ability to scale up the team or down without internal hiring cycles. 

  3.How long does it usually take to see a positive ROI on dedicated developers?

Ans: You will require somewhere around 3 to 6 months. In the initial months, costs can be significantly higher due to onboarding and learning curves. You need to assess your progress quarterly or annually to ensure true profitability.