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Key Takeaways
- The minimum initial monthly running budget, excluding variable costs, averages $54,167, dominated by $41,667 allocated to payroll expenses.
- Payroll is the largest recurring expense, representing $500,000 annually in 2026, making strict management of the 45 FTEs crucial for cost control.
- Reaching profitability requires a substantial capital buffer of at least -$503,000 to sustain operations through the projected 30-month runway until the June 2028 break-even point.
- The cost structure features extremely high variable expenses, totaling 285% of revenue through COGS for hosting and associated sales commissions and payment fees.
Running Cost 1 : Payroll
Payroll Baseline
Your 45 FTEs drive an estimated $500,000 total salary expense by 2026, translating directly to a $41,667 monthly wage burn rate. This figure is the baseline for your operational runway planning.
Cost Breakdown
This $500,000 annual projection for 45 FTEs sets your core personnel cost. Key anchors include the CEO salary at $150,000 and the Lead Developer at $130,000. Dividing the total by 12 months yields a $41,667 monthly wage burn. This cost excludes payroll taxes and benefits, which adds significant overhead.
Managing Headcount
Control headcount growth by linking new hires directly to subscription milestones, not just revenue targets. Avoid premature hiring for roles like Customer Success before onboarding processes are fully automated; that’s defintely a common early mistake. If onboarding takes 14+ days, churn risk rises fast.
- Tie hiring to utilization rates.
- Use contractors initially for specialized needs.
- Benchmark salaries against regional averages.
Margin Protection
Since Sales Commissions are 110% of revenue, keeping the fixed $41,667 monthly payroll lean is crucial for margin protection. If you hire too fast, high fixed costs crush contribution margin before variable sales costs overwhelm you.
Running Cost 2 : Cloud Hosting
Hosting Cost Control
Cloud infrastructure isn't overhead; it’s a direct Cost of Goods Sold (COGS) tied to serving customers. By 2026, expect these costs to consume 50% of total revenue. You must link every dollar spent on servers and data processing directly to customer usage volume. If usage scales faster than revenue, profitability vanishes quickly.
Infrastructure Inputs
This cost covers the servers, databases, and networking required to run the platform for your SMEs. To forecast accurately, you need usage metrics like data storage per client or compute hours used per contract processed. Estimate this cost as 50% of projected revenue for 2026, treating it like raw material cost, which is a defintely necessary baseline.
- Compute usage (CPU/RAM)
- Data transfer volume
- Active vendor count
Taming Usage Spikes
Since this is a variable COGS, managing it means optimizing architecture, not just negotiating the base contract. Watch out for data egress fees, which often balloon unexpectedly. Implement automatic scaling limits now to prevent runaway spending when a client suddenly adds hundreds of vendors. Don't wait for the quarterly review.
- Audit data egress fees monthly
- Right-size server instances
- Automate scaling thresholds
Actionable Tracking
You need a dashboard showing hosting cost as a percentage of revenue daily, not just monthly. If the 50% benchmark starts creeping toward 55% in Q3 2025, you have an immediate efficiency problem. This metric dictates your true gross margin potential as you scale the client base.
Running Cost 3 : API/Data Services
API Cost Reality
Third-party data services are a major cost driver for vendor verification and analysis. In 2026, these services will consume 40% of total revenue. You must negotiate these rates down to 30% by 2030 or your gross margins will suffer significantly under current projections.
Data Cost Drivers
This expense covers essential external Application Programming Interface (API) feeds for checking vendor legitimacy and performance scoring. To estimate this cost accurately, you need the projected revenue figure for 2026 multiplied by the 40% rate. It’s a direct cost tied to transaction volume or user activity, not fixed overhead.
- Vendor verification checks
- Performance data aggregation
- Compliance record lookups
Negotiation Levers
Reducing this dependency requires strategic vendor consolidation and volume commitments early on. If you only use one primary data provider by 2030, you gain leverage. Avoid paying per API call if you can secure tiered pricing based on your projected scale. Churning low-value data feeds helps immediately.
- Consolidate to fewer vendors
- Commit to higher volume tiers
- Review data necessity quaterly
Margin Pressure Point
Hitting the 30% target by 2030 is non-negotiable for margin health. If you don’t improve vendor selection efficiency or build proprietary data sets, this cost will compound the already high 110% variable sales cost burden. That’s a tough spot to be in.
Running Cost 4 : Variable Sales Costs
Variable Cost Overload
Your variable sales costs hit 110% of revenue just covering sales commissions and onboarding before you even pay for cloud hosting. This structure makes profitability impossible right now. You need immediate action on these percentages.
Cost Drivers
This 110% figure comes from two huge buckets: 80% for sales commissions and 30% for Customer Success onboarding, both tied directly to new revenue. You need to model this against the projected $1,500 CAC in 2026. Here’s the quick math: 0.80 + 0.30 = 1.10.
- Commissions: 80% of revenue
- Onboarding: 30% of revenue
- Total Variable Sales: 110%
Cutting Variable Drag
You can’t sustain 110% variable costs; you must reduce the commission structure or shift onboarding costs to a one-time setup fee. A common mistake is paying commissions before the customer is fully onboarded and retained. Honestly, aim to align sales incentives with long-term value.
- Tie commissions to 90-day retention.
- Charge for onboarding setup separately.
- Benchmark commission against industry standard.
CAC Reality Check
If your CAC is $1,500 in 2026, and your variable costs are 110% of revenue, you are paying $1,500 to acquire a customer who immediately costs you more than they pay you back in gross profit. This defintely requires immediate revision of the compensation plan.
Running Cost 5 : Office Overhead
Office Baseline Cost
Your baseline office commitment hits $5,700 monthly, split between rent and utilities. This fixed expense doesn't move when sales dip, creating immediate pressure on your contribution margin until volume picks up.
Office Cost Inputs
Office Overhead covers essential physical space and connectivity. You budget $5,000 for rent and $700 for utilities and internet monthly. This $5,700 must be covered before you see profit, regardless of how many customers you sign up that month.
- Rent: $5,000 per month.
- Utilities/Internet: $700 monthly.
Managing Fixed Space
Avoid signing a long lease early; that locks in the $5,700 expense permanently. Consider a flexible co-working space initially to keep the commitment variable. If you must sign, negotiate a tenant improvement allowance to offset setup costs. Delaying this commitment saves cash burn early on.
- Delay lease signing if possible.
- Negotiate tenant improvement funds.
- Ensure internet speed meets developer needs.
Scaling Mismatch
This $5,700 overhead is a defintely necessary baseline expense that scales poorly with revenue growth. If you hit $50,000 in revenue, this fixed cost represents 11.4% of sales, which is high for a software service.
Running Cost 6 : General Software
Fixed Software Stack
Your essential operational stack—CRM, accounting, and outreach platforms—costs $2,700 per month. This covers the $1,500 for general licenses and $1,200 for marketing tools needed to run the business day-to-day. This is a fixed operational baseline you must cover.
Cost Breakdown
These software costs fund core administrative and sales functions. Estimate this by summing your required CRM seats, accounting software subscriptions, and essential outreach tools. For instance, if you need 5 CRM seats at $100/user and $700 in marketing automation, you hit the target. This is a defintely fixed cost until you scale users.
- List required CRM seats.
- Verify accounting software tier.
- Check marketing tool contracts.
Optimization Tactics
Managing this $2,700 spend means ruthlessly auditing usage every quarter. Many startups overpay for unused seats or premium tiers. Look for annual billing discounts, which often save 15% to 20% versus monthly payments. Avoid overlapping tools that do the same job across departments.
- Audit seats quarterly.
- Switch to annual billing.
- Consolidate tool functions.
Scale Context
At $2,700 monthly, this software spend is small compared to the $41,667 monthly payroll or the 110% variable sales costs. However, failing to control this fixed base means your break-even point remains unnecessarily high. It’s low-hanging fruit for efficiency gains.
Running Cost 7 : Legal/Accounting Fees
Compliance Baseline
Your baseline compliance cost is $2,800 per month, combining professional services and required insurance coverage. This fixed expense must be factored into your burn rate before factoring in variable sales costs.
Cost Breakdown
This $2,800 monthly commitment covers $2,000 for Professional Services (Legal, Accounting, HR) and $800 for Business Insurance. This is a defintely fixed overhead, meaning it must be covered every month to maintain compliance, no matter your sales volume.
- Professional Services: $2,000/month
- Business Insurance: $800/month
Managing Overhead
Minimizing this cost means controlling scope creep on legal and accounting work; avoid paying hourly rates for simple filings. Review your Business Insurance policy annually against current vendor exposure. Don't over-insure based on old assumptions.
- Audit legal retainer usage quarterly.
- Bundle HR compliance needs into the $2,000 block.
Cash Flow Impact
This $2,800 fixed cost is small compared to the 110% variable sales costs, but it directly impacts your minimum viable monthly cash burn. If revenue is low, this compliance cost eats a much larger percentage of gross profit.
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Frequently Asked Questions
Payroll is the largest expense, costing $41,667 per month in 2026, followed by fixed office overhead of $5,700 monthly;