How much does a Fractional CMO cost?
At some point in the growth of your business, you’ll likely find yourself needing a strategic marketing resource. This could be a voluntary decision to accelerate you beyond the magic £10m ‘ceiling’, or it could be a requirement in order to secure investment. However, when you find yourself at the marketing crossroads, you need to ask yourself what the business needs and how you are going to achieve it, with a full-time executive hire or the fractional route.
To understand the value of a fractional CMO, we must first look at the true cost of a full-time hire.
The real cost of a full-time CMO
The true cost of a CMO will vary from business to business, but (unless you stumble upon a hire) you will have a mix of base salary, recruitment fees, taxes, pensions and benefits that all contribute to the year one cost:
| From | To | |
| Base salary | £140,000 | £180,000 |
| Recruitment/head hunter fees (20-30%) | £28,000 | £54,000 |
| National Insurance, benefits and pension | £30,000 | £50,000 |
| Total | £198,000 | £284,000 |
Over three years, this works out at:
| From | To | |
| Year 1 | £198,000 | £284,000 |
| Year 2 | £160,000 | £210,000 |
| Year 3 | £160,000 | £210,000 |
| Total | £518,000 | £704,000 |
These figures exclude equity in the business, which is typically 1-2%, and including it would add significantly to the overall package.
The time lag of a C-suite hire
Beyond the direct costs, there is also a substantial time lag associated with any full-time C-suite hire. It takes an average of 5 months to find the right CMO, followed by a typical 3-6 month notice period that any executive of worth will likely have in their current contract.
That’s typically 8-13 months from the moment you commence your search to having someone in your business. Then you’ll have a 3-month ramp-up period before they are fully effective. During this time, your marketing strategy often stalls. Furthermore, with an average tenure of 34 months, many businesses find themselves repeating this costly process every few years.
The cost of getting the hire wrong!
Clearly, hiring a full-time CMO is expensive, band takes a long time, but what if you get it wrong? You’ve spent between £28k and £54k in recruitment costs, 5 months of management/Board time, 3 months waiting for them to get up to speed (3 months’ salary), and it’s not working. That’s a tough conversation to have around the Boardroom table!
The alternative … a Fractional CMO
A Fractional CMO provides exactly the same high-level strategic direction and Board-level experience of a full-time hire, but on a part-time, outsourced basis. Fractional CMOs are not a less effective, less experienced alternative; they have worked in senior positions across several companies and bring the qualities you need, just not on a full-time basis.
How much does a Fractional CMO cost?
Fractional CMOs are priced on a per-day basis, with rates changing depending on your location within the UK. London-weighting places a premium on experience. Typically these rates will be between £950-£1,200 per day.
Comparing a full-time CMO hire to a Fractional CMO
As discussed above, the cost of a full-time hire ranges from £198k to £284k in the first year. The cost of a Fractional CMO typically ranges between £45k and £91 per year, depending on the complexities and needs of your business. Of course, you’re not getting a full-time resource, but you are getting experience at a fraction of the cost … and they can be in your business almost immediately!
Here’s a comparison of the two choices:
| Full-time CMO | Fractional CMO | |
| Business cost (year 1) | £188,000 – £264,000 | £45,000 – £91,000 |
| Ongoing costs | National Insurance, pension, health care, company car + other benefits | None |
| Recruitment time | 5 months | 1 week |
| Notice period | Minimum of 3-months | Typically 1 month |
| LTIP options | 1-2% equity, share options or a mixed package | None |
Which option is best for you?
The choice between a full-time and fractional CMO will come down to personal preference, business circumstancies and your current stage of growth. While a full-time hire is a permanent pillar of your business, a fractional CMO should be seen as a high-impact investment that provides the structure, capability, and accountability of a professional in-house team without the associated risk or cost.
A hybrid approach?
A full-time CMO could well be the right choice for your longer-term outlook, but if it’s going to take you between 8 and 13 months to hire the right person, then you could consider a Fractional CMO as an interim position. This allows you to benefit from a solid marketing strategy that can be executed quickly, meeting revenue growth objectives. What’s more, you can then use their experience to help you make informed decisions about the longer-term option!