This is usually argued by people with an interest in the answer. Here is the version that accounts for the costs both sides tend to leave out.
The true cost of in-house
Salary is roughly two thirds of it. Add recruitment, equipment, software licences, benefits, management time and the productivity gap while someone learns your business. Then add the risk that concentrates in one person: a single developer who leaves takes the only understanding of your systems with them.
The harder problem is breadth. Modern delivery needs design, front-end, back-end, content and paid media. One or two people cannot cover that competently, so you either hire more than you need or accept gaps.
The true cost of an agency
The hourly rate looks higher because it includes everything above, plus margin. What you are buying is coverage without the fixed commitment: several specialisms available when needed, continuity when someone is unavailable, and exposure to how the problem was solved elsewhere.
The costs are real too. An agency will never know your business as intimately as an employee. Response times are contractual rather than immediate. And if the relationship ends badly without proper handover, you can lose access to your own systems, which is why ownership terms matter more than rate.
Where each genuinely wins
In-house wins when the work is continuous and deeply specific to your operations: an internal platform, a product with a roadmap, daily merchandising. Context compounds, and paying for someone to relearn it every engagement is waste.
An agency wins for project work with a defined shape, for specialisms you need occasionally, and when you need capability now rather than in three months.
The arrangement most companies end up with
One capable person in-house who owns the roadmap, understands the business and can brief well, plus an agency for delivery capacity and specialisms. That person is the difference between an agency relationship that works and one that produces expensive misunderstanding.
The failure mode is the opposite: no internal owner, an agency guessing at priorities, and nobody able to say whether the work was right.
Protect yourself either way
Whoever builds it, insist that you own the code, the domain, the hosting and every analytics account. Insist on documentation and a handover that has been tested by someone else following it. These terms cost nothing to agree at the start and are close to impossible to obtain during a dispute.
Frequently asked questions
What about freelancers?
Excellent value for defined pieces of work. Riskier as a sole dependency for anything revenue-critical, for the same single-point reason as one in-house developer.
How do I judge an agency before committing?
Give them something small first. Two weeks of real work tells you more than any pitch.
