Fractional CFO vs Full-Time: The Real Cost Comparison

## The Real Cost of a Full-Time CFO vs. a Fractional CFO Model

One of the most common questions we hear from founders is: "Should we hire a full-time CFO or work with a fractional CFO?"

The answer isn't straightforward, and that's by design. What works for a $2M ARR pre-Series A company looks completely different from a $10M ARR Series B business. But what we've noticed over years of working with growing companies is that founders often underestimate the true cost of a full-time hire and overestimate what they actually need.

Let's cut through the noise with actual numbers and the decision framework we use with our clients.

## What You're Actually Paying for a Full-Time CFO

### The Salary Story

On the surface, a full-time CFO salary looks reasonable. In most U.S. markets, you're looking at:

- **Seed to Series A**: $150K–$200K base salary
- **Series A to Series B**: $200K–$280K base salary
- **Series B and beyond**: $280K–$400K+ base salary

But that's just the salary conversation.

### The Hidden Costs Nobody Talks About

When you hire a full-time CFO, you're committing to significantly more than the salary line item. Here's what our clients don't expect:

**Employment taxes and benefits** (typically 25–35% of salary):
- Payroll taxes (FICA, unemployment insurance)
- Health insurance premiums
- 401(k) matching
- Workers' compensation insurance

**Recruiting and onboarding costs**:
- Executive recruiter fees (15–25% of first-year salary)
- Onboarding and training
- Delay in productivity (typically 90–180 days before they're fully productive)

**Equity and retention packages**:
- Stock options (often 0.5–1.5% of company equity)
- Performance bonuses (10–30% of salary)

**Professional development and tools**:
- Software subscriptions, certifications, conferences
- Travel for investor meetings and fundraising support

**The opportunity cost of waiting**:
- If you're fundraising in 3 months and it takes 4 months to hire and ramp a CFO, you've missed your window

### The Real Math

Let's look at a concrete example. A Series A founder hires a CFO at $220K salary in Austin, Texas.

- Base salary: $220,000
- Employment taxes and benefits (30%): $66,000
- Recruiter fees (20% one-time): $44,000
- Equity (0.75% vested over 4 years): ~$150,000–$300,000 depending on valuation
- Bonus structure (20% annual): $44,000
- **Total Year 1 cost: ~$414,000–$514,000 fully loaded**

And that's before accounting for the reality that they'll take 3–4 months to reach full productivity. You're effectively looking at 60–70% productivity for half a year.

**True first-year cost: $500K–$600K for partial productivity.**

## The Fractional CFO Model: What You're Actually Getting

### How Fractional CFO Pricing Works

Fractional CFO engagements vary widely, but here's what we typically see:

**Monthly retainer model** (most common):
- **Early stage (Seed–pre-Series A)**: $3,000–$7,000/month
- **Series A**: $7,000–$12,000/month
- **Series B and growth**: $12,000–$20,000+/month

**Hourly or project-based model**:
- $200–$400/hour depending on expertise and market
- Usually used for specific projects (due diligence, board prep, fundraising materials)

### What's Included (And Not Included)

This is where founders often misunderstand the model. When you hire a fractional CFO:

**You typically get:**
- Monthly financial reporting and analysis
- Cash flow forecasting and management
- Fundraising financial preparation and pitch deck support
- Board-level financial reporting
- Strategic financial advice and planning
- Investor relations communication support
- Budget and headcount planning
- Finance team leadership and guidance (if you have one)

**You might NOT get:**
- Day-to-day bookkeeping (that's usually outsourced bookkeeping)
- Full-time employee management
- AP/AR processing
- Payroll administration
- Tax preparation (that's typically your CPA)

### The Real Cost Picture

Using the same Series A scenario:

- Monthly fractional CFO retainer: $10,000
- Annual cost: $120,000
- **No onboarding delay—you have strategy on day one**
- **No equity given away**
- **Fully scalable if you eventually need more hours**

**Year 1 total investment: $120,000–$140,000 (accounting for implementation and setup)**

That's roughly **75% cheaper** than a full-time hire with a 4–6 week start date instead of a 4–6 month hiring process.

## When Full-Time Actually Makes Financial Sense

Now, this isn't to say fractional CFOs are always the answer. There are scenarios where a full-time CFO becomes the smarter investment:

### You're Series B+ with $10M+ ARR

At this scale, you need:
- Constant hands-on financial management
- A dedicated person building your finance team
- Day-to-day capital allocation decisions
- Quarterly investor relations and board management

The fractional model breaks down because you actually need 40 hours/week of CFO time, and you're paying for it piecemeal. A full-time hire makes economic sense.

### You're in Hypergrowth Mode

If you're growing 20%+ month-over-month:
- You need immediate, real-time financial decisions
- A fractional CFO will become a bottleneck
- You'll end up paying overage fees that approach full-time salary anyway

### You're Raising a Large Round or IPO-Bound

Full-time CFO involvement in diligence, deal structuring, and investor relations is typically expected by institutional investors at larger funding rounds. A part-time CFO can support this, but investors often expect full-time CFO bandwidth.

## The Hybrid Model: The Best of Both Worlds

Here's what we're seeing more of, and what often makes the most sense:

**Early stage**: Fractional CFO ($10K/month) + outsourced bookkeeping ($1–2K/month) = $11–12K/month

**Series A approaching Series B**: Fractional CFO ($12–15K/month) + part-time controller/finance manager ($4–6K/month) = $16–21K/month

**Series B**: Full-time CFO ($20–25K/month fully loaded) but bringing on a fractional CFO FIRST before hiring, so you have financial strategy dialed before you bring on the permanent team member

In our experience, the hybrid model—fractional CFO + outsourced ops—lets you access C-level strategy without the overhead of a full-time team until you actually need one.

## Key Questions to Ask Yourself

Before deciding between full-time and fractional, honestly answer these:

1. **Do I need this person 40 hours per week?** If the answer is "probably not," fractional is likely right.

2. **Are we fundraising in the next 12 months?** Fractional CFOs are better equipped to ramp quickly for fundraising support.

3. **Do I have a finance team that needs managing?** Only hire full-time if you have 2+ people reporting to the CFO.

4. **Can I commit to a 6-month minimum contract?** Fractional relationships work best with stability; if you're thinking month-to-month, you're not ready for either model.

5. **What's my actual pain point?** Missing deadlines? Weak board packages? Unclear cash runway? Fractional solves most of these faster and cheaper.

6. **Will this person replace me making financial decisions, or empower me to make better ones?** The best CFOs (fractional or full-time) do the latter.

## Common Mistakes We See Founders Make

**Mistake #1: Hiring full-time too early because they feel like they "should" have a CFO**

We've watched founders at $1M ARR hire a $180K CFO because they felt it was the right signal to investors. That CFO spends 60% of their time on busywork and the founder still doesn't have real strategic financial support.

**Mistake #2: Going with the cheapest fractional CFO and wondering why they're not strategic**

The $2,500/month fractional CFO probably isn't spending meaningful time on your business. You get what you pay for.

**Mistake #3: Expecting a fractional CFO to replace your bookkeeper**

This is the number one source of disappointment. A CFO does strategy and analysis. Someone else needs to handle transactions and reconciliations.

**Mistake #4: Not clarifying expectations upfront**

A fractional CFO relationship works when you both know: How many hours per week? Which specific deliverables? Who owns implementation? What happens if you need extra hours?

## How to Evaluate a Fractional CFO Firm (Or Full-Time Candidate)

Regardless of which model you choose, look for:

1. **Experience at your stage** — Someone who's worked with companies at your growth rate and funding level

2. **Specific, recent fundraising success** — Can they show you examples of pitch decks, financial models, and investor materials they've actually built?

3. **Integration with your tech stack** — Do they use Carta, Brex, QuickBooks, or whatever systems you're on? Can they implement quickly?

4. **Board presentation experience** — This matters more than most founders realize. Can they create clear, investor-ready packages?

5. **References from companies like yours** — Not bigger, not smaller. Companies at your stage with your growth rate.

## The Bottom Line

For most startups between Seed and Series B, a fractional CFO model wins on:
- **Speed**: You start getting strategic financial support in weeks, not months
- **Cost**: 75% cheaper than full-time with zero equity dilution
- **Flexibility**: You pay for what you need; if you need 60 hours one month and 20 the next, you can adjust
- **Quality**: You get senior expertise instead of an overqualified junior finance person

You move to a full-time CFO when you have enough financial complexity and headcount that 40 hours/week is genuinely occupied and when the strategic decisions are so frequent that part-time feedback creates bottlenecks.

Most founders we work with start fractional and transition to full-time CFO + team only once they hit $15M+ ARR. That transition timing is where the real value of the fractional model becomes obvious: you learn what you actually need before you make a six-figure commitment.

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## Ready to Make the Right CFO Decision for Your Stage?

At Inflection CFO, we work with founders to assess whether fractional support, full-time hiring, or a hybrid approach makes the most sense for your business. If you're unsure whether now is the time for CFO-level support—or which model fits your budget and goals—we offer a free financial audit to help clarify your next steps.

[Schedule a 20-minute conversation with our team](/contact) to discuss what CFO support looks like for your company.