The real cost of a fractional CTO vs hiring full-time
What does a fractional CTO actually cost in the UK, and how does it compare to hiring a full-time CTO? A transparent breakdown of salaries, employer on-costs, day rates, and realistic scenarios for seed stage through to growth stage businesses.
Every founder I speak to asks the same question eventually. Not "what does a fractional CTO do?" - they've usually worked that out by the time we talk. The question is simpler and more practical: "What does it actually cost, and how does it compare to just hiring someone full-time?"
It's a fair question. And it deserves a straight answer with real numbers, not vague talk about "it depends" or "contact us for a quote." So here's the full breakdown of fractional CTO cost in the UK versus hiring a permanent CTO - with realistic scenarios for different company stages.
I'm going to be transparent about my own rates too. If you're evaluating this decision, you need actual figures to work with.
The true cost of a full-time CTO in the UK
Let's start with the permanent hire, because this is where most founders significantly underestimate.
When you see a CTO salary advertised at, say, £150,000, that's the base. It's not what you'll actually pay. The total employer cost includes several additional components that add up fast.
Base salary
UK CTO salaries vary significantly by location and company stage. Based on current market data for 2025-2026:
- Regional UK: £120,000 - £160,000
- London: £150,000 - £200,000+
- High-growth startups / scale-ups: £170,000 - £250,000+
The median sits around £150,000 for an experienced CTO outside London. In London, you're looking at £160,000 - £180,000 as a realistic mid-point.
For these examples, I'll use £150,000 as a sensible baseline for a competent, experienced CTO.
Employer National Insurance
From April 2025, the employer NI rate increased to 15% (up from 13.8%), with the secondary threshold dropping to £5,000. For a CTO on £150,000, that means:
Employer NI: approximately £21,750 per year
That's a cost your CTO never sees on their payslip, but you see it every month on yours.
Pension contributions
Auto-enrolment requires a minimum 3% employer contribution. But for a senior executive hire, 3% won't be competitive. Most CTOs will expect 5-8%, and some will negotiate higher.
At 5% on a £150,000 salary:
Pension: £7,500 per year
Benefits package
A competitive CTO package typically includes:
- Private health insurance: £2,000 - £4,000/year
- Life insurance: £500 - £1,500/year
- Income protection: £1,000 - £2,000/year
- Professional development budget: £2,000 - £5,000/year
- Equipment and home office: £2,000 - £3,000 (year one)
- Other perks (gym, wellness, etc.): £1,000 - £2,000/year
Benefits: £8,500 - £17,500 per year (I'll use £12,000 as a mid-point)
Equity or bonus
At seed and Series A, equity is common and sometimes expected. Annual bonus schemes for CTOs typically range from 10-20% of base salary. Even if you offer equity instead of cash bonus, it has a real cost to the business.
Bonus/equity value: £15,000 - £30,000 per year (I'll use £20,000)
Recruitment costs
This is the one that catches people out. Executive search firms typically charge 25-33% of first-year salary for CTO-level hires. On a £150,000 salary, that's:
Recruitment fee: £37,500 - £49,500 (one-off, but often paid in year one)
Even if you use a standard recruiter rather than an executive search firm, you're looking at 20-25%.
Total cost of a full-time CTO
Putting it all together for year one:
| Component | Annual cost |
|---|---|
| Base salary | £150,000 |
| Employer NI (15%) | £21,750 |
| Pension (5%) | £7,500 |
| Benefits package | £12,000 |
| Bonus / equity | £20,000 |
| Recruitment fee (year 1 only) | £40,000 |
| Year 1 total | £251,250 |
| Ongoing annual (year 2+) | £211,250 |
And that's on a £150,000 base. If you're hiring in London or competing with well-funded startups for talent, the base salary alone could be £180,000 - £250,000, pushing the total employer cost to £280,000 - £380,000+ per year.
The rule of thumb: multiply the base salary by 1.3 to 1.4 to get the true annual employer cost, then add the recruitment fee on top for year one.
What a fractional CTO costs
Now let's look at the fractional model. The structure is fundamentally different - you're paying for days of senior leadership, not a full-time salary.
Day rates in the UK market
Fractional CTO day rates in the UK currently range from £800 to £1,600 per day, depending on experience, specialism, and the nature of the engagement.
My rates at SoftWeb sit at £800 - £1,000 per day, which positions at the accessible end of the market. I price this way deliberately - I'd rather work with growing businesses that genuinely need the help than price myself into a bracket that only well-funded startups can afford.
There are no employer NI costs, no pension contributions, no benefits to fund, and no recruitment fees. The day rate is the day rate.
Typical engagement levels
Most fractional CTO engagements fall into one of three patterns:
| Engagement level | Days per week | Monthly cost (at £900/day) | Annual cost |
|---|---|---|---|
| Light touch | 1 day/week | £3,900/month | £46,800/year |
| Standard | 2 days/week | £7,800/month | £93,600/year |
| Intensive | 3 days/week | £11,700/month | £140,400/year |
(Based on approximately 4.33 weeks per month, 52 weeks per year. Actual costs may vary slightly based on calendar months.)
The flexibility is the point. You're not locked into a fixed cost regardless of what you need. If you need more support during a critical product launch or a funding round, you scale up. When things settle, you scale back. Try doing that with a permanent hire.
The comparison: three real scenarios
Abstract numbers are useful, but what matters is how they apply to your actual situation. Here are three scenarios I see regularly.
Scenario 1: Seed stage - "I need someone to check the foundations"
Your situation: You've raised a seed round or you're bootstrapping. You have 2-4 developers, possibly outsourced. You need someone to review architecture decisions, help you evaluate your development team, and make sure you're not building on shaky foundations.
What you need: 1 day per week of fractional CTO support
| Option | Annual cost | What you get |
|---|---|---|
| Full-time CTO | £211,250+ | Dedicated executive - but 80% of their time has nothing to do |
| Fractional CTO (1 day/week) | £46,800 | Focused strategic oversight on the days it matters |
Savings: £164,450 per year (78%)
At seed stage, hiring a full-time CTO is almost never the right call. You don't have enough work to keep a senior technical leader busy five days a week, and the salary will burn through your runway far faster than it should. One day a week of experienced oversight is usually more than enough to keep your architecture sound and your team on track.
Scenario 2: Series A - "We're growing fast and need proper technical leadership"
Your situation: You've raised Series A, the team is growing to 6-12 developers, you're scaling the platform, and technology decisions are becoming more consequential. You need someone setting technical direction, helping with hiring, and providing governance.
What you need: 2 days per week of fractional CTO support
| Option | Annual cost | What you get |
|---|---|---|
| Full-time CTO | £251,250 (year 1) | Full-time executive with recruitment overhead |
| Fractional CTO (2 days/week) | £93,600 | Strategic leadership plus hands-on architectural depth |
Savings: £157,650 in year 1 (63%), £117,650 ongoing (56%)
This is the sweet spot for fractional CTO engagements. Two days a week provides enough time for meaningful strategic work - architecture reviews, team mentoring, stakeholder communication, vendor evaluation - without the overhead of a full-time executive hire. The money you save can go towards hiring another senior developer or investing in the product.
Scenario 3: Growth stage - "Technology is critical and we need serious oversight"
Your situation: You have 10-20+ developers, multiple products or services, and technology is central to your competitive advantage. You're considering a full-time CTO but wondering whether fractional support at higher intensity might work.
What you need: 3 days per week of fractional CTO support
| Option | Annual cost | What you get |
|---|---|---|
| Full-time CTO | £280,000+ (London, senior) | 100% dedicated executive |
| Fractional CTO (3 days/week) | £140,400 | Three days of focused leadership per week |
Savings: £139,600+ (50%)
At this level, the cost advantage narrows but is still significant. The question becomes less about cost and more about what you actually need. Three days a week of a fractional CTO who brings breadth of experience from multiple organisations can deliver more impact than a full-time hire who only knows your context - especially during the first 12-18 months.
When full-time is the better option
I'd be doing you a disservice if I only made the case for fractional. There are situations where hiring a full-time CTO is genuinely the right decision.
Hire full-time when:
- Technology is your core product. If you're a SaaS company or technology platform, your CTO needs to live and breathe the product every day. A fractional arrangement at this stage is a bridge, not a destination.
- You have 15+ engineers. Managing a large engineering team is a full-time job. At this scale, you need someone in the building (or on Slack) every day.
- You're preparing for exit. Acquirers and investors expect to see a permanent CTO on the leadership team. A fractional arrangement can feel like a gap, even if it's been working well.
- You can afford to wait 4-6 months. Full-time CTO recruitment takes time - typically 4-6 months from starting the search to the new hire being effective. If you can wait, and you have the budget, it may be worth it.
- Your needs are consistent and predictable. If you genuinely need five days a week of technology leadership every week, the economics start to favour a permanent hire.
Even in these cases, there's a strong argument for engaging a fractional CTO while you recruit. I've done this several times - providing leadership continuity during the search, helping define the role, participating in candidate evaluation, and then handing over properly when the permanent hire starts. It means you never have a leadership gap.
What you're actually buying
The cost comparison only tells part of the story. What shifts the calculation for most founders is what they're actually getting for the money.
A full-time CTO brings depth in one context. They learn your business intimately, they're available every day, and they build long-term relationships with the team. That's valuable.
A fractional CTO brings breadth across many contexts. I currently work with multiple businesses across different sectors and stages. Every problem I solve for one client teaches me something I can apply to the next. That pattern recognition - knowing that the scaling challenge you're facing is similar to one I solved six months ago in a different industry - is something no amount of dedication to a single company can replicate.
I wrote about this breadth-versus-depth trade-off in more detail in the CTO Hiring vs Fractional Comparison guide, which includes a scoring framework to help you evaluate which model fits your specific situation. It's free and it's genuinely useful for this decision.
The hidden cost most founders miss
There's one more factor that rarely appears in cost comparisons but matters enormously: the cost of getting it wrong.
If you hire a full-time CTO and it doesn't work out - wrong cultural fit, wrong skill set, or simply the wrong hire - the cost is brutal. You're looking at:
- 3-6 months of underperformance before the issue is clear
- Severance costs (often 3-6 months' salary at executive level)
- Another 4-6 months of recruitment
- Lost momentum, team disruption, and strategic drift
- Total cost of a bad hire: easily £200,000 - £400,000+ when you factor in the opportunity cost
With a fractional arrangement, if it's not working, you adjust. Change the engagement level, change the focus, or end the arrangement. There's no severance, no notice period drama, and no six-month gap while you recruit again.
For a non-technical founder making this decision for the first time, that reduction in risk is worth a great deal.
Frequently asked questions
What does a fractional CTO actually do in their limited days?
A fractional CTO focuses on the work that only a senior technology leader can do: setting technical direction, reviewing architecture decisions, mentoring senior developers, evaluating vendors, and translating between business goals and technical execution. The day-to-day management of the development team typically stays with a tech lead or engineering manager. I wrote about signs your project needs this kind of oversight if you're wondering whether your situation warrants it.
Can a fractional CTO handle an urgent crisis outside their scheduled days?
Yes. Any good fractional CTO will have an emergency availability protocol. In my engagements, I'm contactable for genuinely urgent issues outside scheduled days. A production outage doesn't wait until Tuesday. That said, if "urgent" issues are happening every week, that's usually a sign the architecture or team needs attention - which is exactly what the fractional engagement should be addressing.
How does a fractional CTO work with my existing development team?
The same way a full-time CTO would, just concentrated into fewer days. I typically join standups on my engagement days, conduct regular architecture reviews, have one-to-ones with senior developers, and attend key stakeholder meetings. The team knows when I'm available, and we establish clear communication channels for the days I'm not. Most teams adapt to this rhythm within the first few weeks.
Is a fractional CTO just a consultant by another name?
No. A consultant typically delivers a report and leaves. A fractional CTO is embedded in your business - attending team meetings, making ongoing decisions, and staying accountable for outcomes over months or years. I don't write reports and walk away. I work alongside your team and stay engaged through execution. That's a fundamental difference, and it's the reason my approach to technology leadership produces lasting results rather than shelf-ware.
At what point should I transition from fractional to full-time?
The honest answer: when your business has grown to the point where technology leadership genuinely requires five days a week of attention, and you have the budget to support a £200,000+ total cost. For most businesses, that's somewhere around 15-20 engineers and £5M+ revenue. Even then, I'd recommend engaging a fractional CTO first to define the role and help evaluate candidates - it significantly reduces the risk of a bad hire.
Making the decision
If you're weighing this decision right now, here's what I'd suggest.
Start by being honest about what you actually need. Not what sounds impressive on paper, not what your investor mentioned in passing, but what your business genuinely requires right now. If the answer is "experienced technical oversight a few days a week," that's a fractional CTO. If the answer is "a full-time technology executive who will build and lead a large engineering organisation," that's a permanent hire.
I've put together a comprehensive CTO Hiring vs Fractional Comparison guide that walks through this decision in detail, including a scoring framework you can use to evaluate your specific situation. It covers costs, timelines, risk, hybrid approaches, and the questions you should be asking whichever route you choose.
And if you'd rather just have a conversation about your specific situation, get in touch. I'll give you an honest assessment of what I think you need - even if the answer is "you don't need me."