In an increasingly complex and competitive business landscape, many companies are turning to fractional Chief Marketing Officers (fCMOs) to provide high-level marketing strategy and guidance without the cost of a full-time executive. However, determining how much to pay a fractional CMO can be a challenge. Here are some tips on establishing an appropriate compensation package.
The first step is to clearly define what fraction of a full-time CMO role you need. For example, some common fractional commitments are:
The more hours per week you need your CMO to work, the higher the compensation should be. Be clear during initial conversations about your expected time commitment.
Although you aren’t hiring a full-time CMO, understanding full-time comp ranges provides helpful context. According to recent research, the average total compensation for very large company CMOs (over $5B revenue) is roughly $650K-$800K, including salary, bonuses, equity awards, and so on. Mid-sized public companies pay around $500K, while early-stage venture-backed companies average closer to $350K.
From there, fractional CMOs typically price their services using an hourly rate or project fee model. Hourly fractional CMO rates often range from $150/hr on the low end for less experienced strategists to $500/hr (or more) for senior-level experience.
Alternatively, you may want to establish a fixed monthly retainer fee. To calculate this, take the hourly rate and multiply it by your expected monthly hours. For example, for a 10-hour per week (40 hours per month) commitment from a fractional CMO charging $250/hr, the monthly retainer would be $10,000.
Some fractional CMOs suggest minimum 6-month commitments, as it allows them to truly dive in and add more value over an extended period. Others are open to 3-6 month terms.
Beyond base hourly rates or monthly fees, some fractional CMO compensation packages also include an annual performance bonus component – typically 10-20% of total fees. This provides financial incentive for the CMO to achieve key business objectives tied to marketing initiatives. Performance metrics may include sales targets, web traffic growth, funnel conversion rates, or other KPIs. Defining these targets upfront aligns interests.
When assessing cost, focus on the value being provided versus purely hourly rates. Having an experienced marketing leader involved at a strategic level for 10-20 hours per week at a reasonable cost can pay huge dividends. Of course, the specific rate depends on credentials, experience level, and expected impact. But spending $5K-$20K per month is excellent value compared to a full-time CMO costing $25K-$80K+ per month in salary alone.
A fractional marketing executive allows you to “right-size” executive advice and support for your current business needs and budget. As your company evolves, you can flexibly increase or decrease the fractional commitment as warranted. Establishing win-win compensation models from the start enables an impactful ongoing partnership.
If your company needs a B2B SaaS Fractional CMO, consider working with Peter Geisheker. Peter has been providing Fractional CMO services for over 20 years and has expertise in growth tactics and conversion optimization.