How could a SAAS company survive long term if they are making less than 200k per employee per year? The fully loaded cost of an engineer which I assume are the majority of their employees has to be close to 200k or more after you include desk space, taxes etc...
I think the assumption is that the company is in growth mode, spending all their revenues on staff to build the company, generating zero profit. The ~$200K sum is approximately the loaded cost per employee.
Well-funded companies have extra money to spend so they'll have more people than their revenues would indicate, which is simulated by dividing their revenues by a lower cost per employee. (Conversely for poorly funded companies...)
Not all employees are software engineers. Even inside the engineering department QA people aren't earning that much. Plus there are roles like marketing, account managers, analysts, IT, HR, etc that don't pay that much (at least compared to software engineers).
Comments
How could a SAAS company survive long term if they are making less than 200k per employee per year? The fully loaded cost of an engineer which I assume are the majority of their employees has to be close to 200k or more after you include desk space, taxes etc...
I think the assumption is that the company is in growth mode, spending all their revenues on staff to build the company, generating zero profit. The ~$200K sum is approximately the loaded cost per employee.
Well-funded companies have extra money to spend so they'll have more people than their revenues would indicate, which is simulated by dividing their revenues by a lower cost per employee. (Conversely for poorly funded companies...)
Not all employees are software engineers. Even inside the engineering department QA people aren't earning that much. Plus there are roles like marketing, account managers, analysts, IT, HR, etc that don't pay that much (at least compared to software engineers).