Fractional vs Full-Time Executive: The Real Cost Comparison
A $250K full-time executive actually costs $325K+. Here's the honest math comparing fractional vs. full-time executive hires for growing companies.
"Why pay $6,000/month for a fractional executive when a full-time hire costs $20,000?" — said no CFO ever, because the math actually runs the other direction. Here's the honest comparison for companies weighing the decision.
What Full-Time Actually Costs
A $220K full-time CFO costs far more than $220K:
- Base salary: $220,000
- Payroll taxes and benefits (~25%): $55,000
- Equity/bonus: $20,000-$50,000
- Recruiting cost (15-25% of salary for exec search): $40,000+
- Onboarding time: 3-6 months to full productivity
- Year-one real cost: $335,000-$365,000
And if it's a bad hire — executive mis-hires happen in roughly 40% of cases — you restart the search with severance paid and a year lost.
What Fractional Costs
A fractional CFO at $6,000-$8,000/month for 15-25 hours:
- Retainer: $72,000-$96,000/year
- No benefits, equity, payroll taxes, or recruiting fees
- Productive from week one — they bring frameworks from a dozen prior engagements
- Year-one real cost: $72,000-$96,000
That's 70-75% less than full-time for senior-level output — because you're buying exactly the hours the work needs, not 40 hours of meetings.
When Full-Time Wins
Fractional isn't always right:
- Company >$20-30M revenue — the function probably needs daily leadership
- Heavy people management — if the role is 70% managing a team, presence matters
- Deep operational execution — strategy is fractionable; daily firefighting less so
- You've found a genuine A-player — great full-time executives compound in ways retainers can't match
When Fractional Wins
- $1M-$15M companies that need senior thinking but not 40 hours of it
- Specific expertise bursts — fundraising, M&A prep, system implementation
- Testing the function — hire fractional first; convert to full-time once you know what the role needs to be
- Multiple weak spots — a fractional CFO + fractional CMO for less than one full-time VP
The Transition Path
The smartest play for many companies: start fractional at $5M revenue, let the fractional exec help define the role and even recruit their full-time successor around $15-25M. Some fractional executives offer exactly this "build then hand off" model — it's a feature, not a bug, of the fractional approach.