Using a Fractional COO in your business may be something to consider in 2023. So you’ll need to know more about Fractional COO rates. More well-known fractional executive roles historically were either a Fractional CFO or Fractional CMO. Comparatively, a Fractional COO can help across both of those areas while also getting into sales, operations, and strategy. A Fractional COO will accelerate all areas of the business while making each department or team much more efficient.
How much does a fractional COO cost?
Fractional COO rates typically range from $10,000 to $20,000 per month and are based on how experienced and proven this executive is to advise you and help transform your company. This number comes from the cost of full-time COO. The median COO salary across the U.S., as an example, is $470,799 a year. That salary does not include equity or other benefits.
Fractional COO fee models
While top Fractional COOs will not offer you an hourly rate, you may want to understand rates across a few different models. In my own Fractional COO practice, for example, I do offer three different ways to help but they are all based around a monthly rate. The more inexperienced a Fractional COO is, the more likely they are willing to plug in briefly for hourly-based tasks.
High-performing Fractional COOs don’t offer hourly services. If you have a constrained budget, you can find less experienced Fractional COOs who will offer hourly services in the $150 to $200 hourly rate range. Just be aware that many of these people are more like senior project managers or director-level than having held C-Suite roles in the past. As an example, I was a CEO for over ten years of a multi-million dollar business I started myself. I only began offering Fractional COO services after exiting past ventures.
Another way to think about a Fractional COO is actually a full-time COO you just don’t want on payroll. As a fractional executive, you won’t have to pay out benefits, offer PTO, or extend equity. So there’s still a massive cost savings.
Further, many accomplished Fractional COOs can do the work of a less experienced full-time COO in a fraction of the time. For these reasons, monthly rates for reputable and proven Fractional COO are in the $10,000 to $20,000 per month range. Typically, they will offer three month retainers as a starting point. But it’s not uncommon to have year-long contracts once a relationship is established. Many of my own clients work with me for at least six months or longer.
It’s less common for Fractional COOs to do project work. Proven fractional executives will only do projects as a way to explore a relationship or if they have deep expertise in a specific area. Expect project rates for Fractional COOs to start in the $15,000 range with an upfront deposit usually of 50%.
Revenue bonus rate
Over time, Fractional COOs will develop ample playbooks, frameworks, and assets they can leverage with their clients. Because they’ve seen the same scenarios, kinds of clients, and businesses possibly hundreds of times—I’m likely in the thousands—they know how to get results.
These are the 5% of Fractional COOs on the market. They are willing to take on a revenue bonus rate as a performance model. For example, I offer clients I’ve worked with for a period of time my “mid-tier” Fractional COO rate to help them achieve specific agreed-to milestones. When the milestone is achieved, they pay the difference of my high-tier rate plus a bonus over the course of time it took us to achieve the milestone. Keep in mind that many high-performing Fractional COOs like me do not start relationships this way because we want to get to know clients and their businesses first.
Not all businesses are ready for a Fractional COO. If you’re under seven figures in revenue, you may want to consider a business coaching program or even a community mastermind first. You can get many of the same strategies at a price point that is more affordable. You will have to apply them yourself in certain situations but you can use those to continue to scale your business.
I have two programs myself for businesses and founders like these, including my remote solopreneur community and “uncoaching” program. The community is for freelancers, consultants, and solopreneurs on their way or into the six figures. Uncoaching is for high-earning consultants, fractional executives, or small business owners cruising well into the six-figures.
Fractional COO cost vs full-time COO
If you have a proven Fractional COO available all year, expect to pay between $100,000 to $200,000 annually. That’s still incredibly lower than the $500,000+ all-in compensation many experienced executives demand as full-time COO.
In the past, smaller companies not in the eight-figure revenue range couldn’t even have access to this sort of expertise. So the rise of the fractional executive is an important and significant advancement for small business owners to grow their companies without formally carrying this overhead internally.
Fractional COO costs vs consultant
Do you want personalized help but you can’t justify $10,000 to $20,000 per month for a Fractional COO? You might instead consider hiring a consultant. Consultants are more willing to do hourly or project-based work. Typical monthly costs are less than $10,000 per month. Realize though their focus is less on proven executive leadership strategies for scaling and growth. Instead, they will focus on specific tasks you outline for them to do.
Fractional COO cost vs fractional CFO and CEO
There is definitely some crossover between a Fractional COO and Fractional CFO. But they each have their own strengths. Fractional COOs will definitely have a strong understanding of financials, running P&L statements, costs, and investment opportunities. They won’t necessarily build out financial models, cash projections, deeper financial analysis, or set you up for a potential sale.
Similarly, a Fractional CFO may understand fundamentals of operations. They will not have the same expertise around systems and playbooks to support strategy, marketing, sales or in areas of collaboration, communication, and team dynamics. Many COOs have also been or can more easily step into a CEO role, as the number two person at the company, where that’s not necessarily the case of CFOs.
For these reasons, Fractional COOs can cost more than Fractional CFOs. For CEOs that are less experienced than the Fractional COO, there’s even an argument that their pay rate can be comparable or higher. Again, recall that a Fractional COO only gets cash vs. the total compensation a CEO does.
Find out how much a fractional COO will cost you
Are you in need of a Fractional COO? I’ve helped hundreds of entrepreneurs through the years both as a CEO, business “uncoach”, and Fractional COO. If you’re focused on growing and scaling your business, especially in the area of tech, software, or agency services, learn more or get in touch with me today. I’ve also been running and growing remote teams since 2005, well before what transpired in 2020. So I can help you either optimize your remote team or move to a true Remote First model.