Fractional CMO Cost: A Insider’s Guide To Cost-Efficiency, Low Risk & High Return
How much does a fractional CMO cost? (On average)
The cost of hiring a fractional Chief Marketing Officer (CMO) can vary widely based on several factors. However, it is generally significantly less than hiring a full-time executive. Research indicates that fractional CMOs typically cost 50% to 75% less than a full-time CMO, whose compensation can include base salary, incentives, health and retirement benefits, plus stock options and/or equity.
Payscale.com puts the average CMO salary north of $170K. Skilled CMOs in prominent industries like energy, tech, and healthcare command closer to $350K, with Glassdoor.com placing the upper limit at $452K. And that doesn’t count benefits, bonus, and company equity, which full-time CMOs usually expect.
In contrast, for a seasoned fractional CMO with niche industry experience, companies will invest between $10-25K monthly on flexible, scalable 3, 6 or 12 month engagements.
The image compares the costs and benefits of a fractional CMO with those of a marketing agency and a full-time CMO.
The rates for a fractional CMO can be adjusted based on the required level of involvement, professional experience, area of expertise, and other factors. This post will explore these variables in detail.
Outsourced Chief Marketing Officer pricing models
A majority of outsourced CMOs offer services on a monthly retainer and in select cases, a project-based fee structure. To determine the best fit for your business goals, discuss your needs with potential fractional CMOs to align their pricing model with your specific requirements.
Monthly retainers
Your fractional CMO can charge for their services on a monthly basis. This allows you to calculate the portion of your budget that needs to be allocated to these tasks over the medium term. As mentioned above, the monthly cost for an outsourced CMO can vary between $10-25K based on the engagement, which is significantly lower than hiring a full-time officer.
Strategic Workshop
A project-based hiring example could be a workshop session: the fractional CMO and the company collaborate for a few weeks, gathering information about their goals and current challenges. This culminates in a consultation, to outline the essential next steps for business growth.
Engaging a fractional CMO through a project-based workshop allows you to benefit from their expertise without a long-term commitment, minimizing risk while maximizing potential returns. These workshops can uncover high-impact opportunities and set your business on a path to accelerated growth.
At CBM Group, we provide a set of deliverables, including a brand and messaging audit, a marketing organization and systems audit, and a 6-month marketing overview and execution plan that is aligned with your business objectives. These tools equip the company to drive results effectively. Discover all the CBM Group’s Fractional C-Suite Services here.
Factors influencing the fee
Level of expertise and years of experience
The fractional CMO rates are significantly influenced by their level of expertise and years of experience. For instance, a CMO with over 25 years of experience brings a wealth of knowledge and a proven track record of success, which justifies a higher fee. Their extensive background allows them to offer strategic leadership, innovative solutions, and the ability to navigate complex marketing challenges effectively with a proven track record on what works best.
While many marketing experts may call themselves CMOs, only those who are truly experienced can focus your business on the essential strategies and marketing investments to take your company’s sales and growth to the next level.
According to Forbes, a highly experienced fractional CMO can generate a 64% net revenue increase, while someone who is presented as a CMO but doesn’t truly have the necessary expertise can only generate a 3% growth rate.
By investing in a seasoned fractional CMO, companies reduce the risks associated with hiring less experienced professionals. Their proven track record and industry expertise can drive substantial revenue growth, offering a high return on investment.
Scope of work
The scope of work is another crucial factor affecting an outsourced CMO cost. This includes a range of responsibilities, such as strategic planning, campaign management, team leadership, and performance analysis. A comprehensive scope that requires intensive involvement and oversight will naturally command a higher fee than a more focused, limited set of tasks. Tailoring the scope to specific business needs ensures optimal value and targeted results.
Duration (and frequency) of contract
The contract duration often ranges from three months to a year, impacting the overall cost. Shorter contracts might be more intense and focused, leading to higher monthly fees, while longer engagements could offer more flexibility and potentially lower monthly costs. Frequent involvement, such as weekly strategy sessions, also influences the pricing structure, as continuous input and engagement are valued higher.
Size of the company
The size of the company plays a significant role in determining fractional CMO rates. Larger companies with more complex organizational structures and broader marketing needs may require a more extensive commitment, leading to higher fees. Conversely, smaller companies might need less intensive support, resulting in a more affordable pricing model. The CMO’s role scales with the company’s size and specific marketing demands.
Access top-tier talented Fractional CMOs
Schedule a free 1:1 call to see if CBM Group is a good fitComplexity of the industry
Operating in complex industries like, for example, life sciences and medical devices requires specialized knowledge and expertise, which can increase the cost of a fractional CMO. These sectors demand a deep understanding of regulatory environments, technological advancements, and market dynamics. A fractional CMO with experience in these fields can navigate these complexities effectively, unlike others who may not be familiar with the specific market challenges and nuances.
Pro tip: When hiring a fractional CMO, it is highly advisable—if not mandatory—to ask for industry-specific experience. Only a professional who is deeply embedded in the specific dynamics and needs of the niche can provide tailored guidance and effectiveness with the lowest risk and highest return.
Market complexity
Market complexity significantly impacts the cost of hiring a fractional CMO. In highly competitive industries, such as healthcare technology, the number and strength of competitors can make it challenging to establish a strong market position. A fractional CMO can help navigate these challenges by leveraging your competitive advantages and enhancing your market presence.
Their strategic insights and experience in competitive landscapes enable your company to effectively differentiate itself and achieve sustainable growth amidst intense competition.
Cost-benefit analysis of hiring fractional CMOs (vs full-time CMOs)
| Fractional CMO | Full-Time CMO | |
|---|---|---|
| Average cost | Significantly lower (50%-75% less expensive), tailored to needs | Higher due to salary, health benefits, bonuses, retirement, stock options and/or equity |
| Speed of implementation | An average of 48% faster time-to-market for new products and services, translating into quicker returns on investment | Much longer hiring process, slower start |
| Untainted vision | Fresh, unbiased perspective with outsider ideas | Potential internal biases and contractual restrictions |
| ROI | According to this Forbes article, it can be +500% | It tends to be lower due to higher costs |
A case study from CBM Group: Building a marketing engine and doubling revenue in 24 months
A $40 million point-of-care diagnostics company aimed to double its revenue within 2 years by selling its software system to hospitals. Despite having a strong sales and service team, they lacked a robust marketing engine. To address this, we developed a comprehensive marketing and growth strategy focusing on building awareness, enhancing sales training, and educating customers.
We updated the product positioning, created new messaging, launched a brand campaign and trained the sales team. Additionally, we developed sales collateral, launched the company’s first website, and introduced a successful speakers program to support reference selling. Within three years, the company exceeded $100 million in annual revenue, significantly expanding the adoption of the software system across hospitals in the US.
Interested? Discover our complete portfolio and read client testimonials here.
How to make the most out of a part-time CMO
Set specific and measurable goals
Establishing clear and measurable goals is essential for maximizing the effectiveness of a part-time CMO. Define what success looks like in terms of key performance indicators (KPIs) such as lead generation, brand awareness, and sales growth. Specific goals help the fractional CMO align their strategies with your business objectives and ensure targeted, impactful outcomes.
Understand your priorities
Identifying your business priorities enables the effective allocation of budget and resources. By focusing on high-impact areas, an outsourced CMO can drive significant results within a limited timeframe. For example, if increasing brand awareness is a top priority, the CMO might allocate more resources towards a targeted marketing campaign and public relations efforts.
Tip: Clearly communicate these priorities to ensure that the marketing strategies developed are aligned with your most pressing needs and goals.
Provide comprehensive information and collaborate
Effective collaboration with a fractional CMO starts with providing comprehensive information about your company’s history, market position, and internal processes. Since fractional CMOs are not embedded in your daily operations, sharing detailed insights and context is crucial. This transparency enables them to create more tailored and effective marketing strategies, driving better results for your business.
Hire a CMO that matches your business market
An industry-experienced CMO already understands the market dynamics, regulatory environment, and customer pain points, reducing the learning curve.
Their relevant experience helps in anticipating challenges and leveraging opportunities, a familiarity that enables them to achieve faster and more successful outcomes.
Let us show what we can bring to the table: Book your 1:1 session
CBM Group offers companies proven, flexible, and scalable commercial leadership with a focus on building GTM teams and accelerating growth strategies
By partnering with CBM Group, founded by Colleen Burns, you'll benefit from expert leadership, innovative strategies, and a proven track record in the healthcare technology, life sciences, and medical device and diagnostic sectors.
Ready for transformation and growth? Schedule a call today and discover the value we can bring to your business.
