What is a fractional CTO?
A great Chief Technology Officer (CTO) will keep your dev team in line with their critical mission. But if you don’t have the funding to hire a full-time CTO, it can feel like a real catch-22.
Hiring a fractional CTO may be your best bet.
But what is a fractional CTO? What do they do? And how much will they cost you?
In this post, we’re going to answer all these questions and more.
What is a fractional CTO?
A Fractional Chief Technology Officer (Fractional CTO) provides on-demand services to small businesses and startups – typically on a freelance or part-time basis. They usually work on part of a project rather than full-time.
Being on-demand means they work for a “fraction” of the time and cost.
Typically, fractional CTOs dedicate 10–25 hours per week to a small business or startup for three months minimum.
What do fractional CTOs do?
Fractional CTOs help small businesses and startups by shaping their tech strategy, product roadmaps, and so much more.
Their experience can be invaluable.
More than this, though, fractional CTOs are especially valuable in industries where technological advancements can make or break a business.
Here are some of the tech-related tasks they’re likely to help with:
- Developing and implementing strategies
- Managing IT operations
- Overseeing product development
- Managing vendor relationships
- Evaluating and implementing new technologies
- Providing leadership and mentorship
Why are fractional CTOs in such high demand?
Cost-effectiveness
Experienced CTOs can drain a startup’s budget (which is usually pretty limited anyway), and a startup may not need a full-time CTO.
So hiring someone to work only 15-20 hours a week on high-priority projects makes business sense. The total cost to the startup is less than it would be for a traditional position.
This also works for CTOs. They can charge more per hour than if they were hired on a permanent contract.
Remote and hybrid working trend
Seasoned professionals are learning that work is not where we go anymore.
It’s what we do.
And because they have skills that are in high demand, they know they can be hired by companies from all over the world to jump on projects.
They also know they’ll be compensated handsomely. Rates for part-time jobs have skyrocketed. Someone working 10-20 hours a week can make as much as they made on a full-time job just a few years ago.
What’s fuelling this demand?
As more companies operate remotely and asynchronously, work can be broken into smaller projects. This means companies can hire people fractionally, let them weave their magic, pay for their time, and let them go without having to fire them.
Everyone wins.
Fractional CTO vs. Full-Time CTO vs. Interim CTO
A full-time CTO is a senior executive responsible for the overall tech strategy of a business. Their role is basically the same as that of a fractional CTO (described above), but they enjoy the privileges of a standard C-suite employee, including all associated benefits and bonuses. As a result, they’re more expensive than fractional CTOs.
A fractional CTO takes on the CTO role on a part-time basis. They’ll either take on all the duties of a full-time CTO or focus on specific tech-related challenges.
An interim CTO serves as a temporary executive, bridging the leadership gap while companies search for a suitable replacement. Their main focus is making sure the handover process runs smoothly.
What are the costs of hiring fractional CTO?
Fractional CTOs typically offer flexible pricing models, including hourly rates and monthly retainers.
Hourly rates for a fractional CTO can range from $150 to over $500. Influencing factors are the CTO’s experience, industry, and the specific demands of your project. Hourly rates of over $600 USD are not uncommon.
For ongoing support, monthly retainers are likely. Fractional CTO rates typically vary from $2,000 to $10,000 and over. They’ll depend on the engagement level and breadth of responsibilities assumed.
Fractional CTOs may also set flat fees for projects with clear deliverables and timelines. Depending on the project’s complexity and duration, these fees can vary significantly.
Finally, a fractional CTO for startups will often consider equity compensation as part of their salary. A typical arrangement is a 50/50 split between cash and equity.
How to tell that you need a full-time CTO
Now that we understand what a CTO does, the next question you should ask yourself is: “Are we ready for a CTO?”
There’s no three point formula that can give you the answer to that question. The only way to answer that question is to take stock of where you are as a company and where you want to go.
Set aside the question of “Can we afford a CTO?” for the moment, and think it through. Does the corporate vision require you to rely on technology of any kind? If the answer to that one question is “YES”, then honestly, you at least need to consider the possibility that you need a CTO.
How to find a fractional CTO
You might find yourself needing a CTO before you can afford one.
What should you do?
Your best bet is to find someone who’s willing to step in and fill the role part-time until you’re ready to make a full-time commitment.
The problem then becomes: How do you find someone who meets your needs and is willing to serve part-time? This is where the real challenge lies. Like hiring any technical person, you need to either be able to vet them yourself or have a trusted partner who’s capable of vetting them for you.
This is where we come in.
At Gun.io, we have an entire team of people that currently and previously have served in roles ranging from director to developer. They’re capable of assessing a candidate’s skills and matching them up with the right company.
You might wonder why I know so much about being a part-time CTO–it’s because I am currently serving a company in this role, and I am a Gun.io gunslinger.
Contact us today, and let us help you find your fractional CTO!
