My wife and I planning to add on to our 900 sqft ranch style home in the near future. After speaking to the building inspector, it seems our alternatives are to add a second floor on to the house or build off the back. We would not be doing the construction ourselves, it would be contracted out.

Is there a guide or rule of thumb as to which type of addition would be more cost effective; and, should we consult with a builder to finalize our plans - or an architect?

Thanks for any help you can give me on this!

There are other considerations here. What does the rest of the neighborhood have? If your house would be the only 2-story, then give strong consideration to keeping a ranch. If the addition leaves you with no backyard, add a second floor.
Then get an architect to discuss the plans. Good friends of mine are adding on to their house. Their architect made some suggestions that enhanced the project - things for better flow from room to room and more useful space from the same footprint. The extra cost is a fraction of what the total job will cost.