4 ms·

1mm is their revenue. It will be reduced by cost of goods sold, rent/electricity, taxes, payment for services like AWS, etc. before employees are paid.

charlesdm 8y ago
Margins in software businesses are high. All those things combined (especially in Belarus) aren't going to run higher than say 20% of revenue.
- PacifyFish 8y ago
  Parent comment was disputing the “obviously” claimed for US-based engineers.
beberlei 8y ago
Yes. They are a belarus company, selling to mostly US companies, so probably pay little sales taxes. other taxes are paid on profit, so explicitly after employee salaries are paid. Salaries are usually the largest expense in many IT companies. They don't collect monitoring data or otherwise huge ingest of data from users, their server costs are probably low. Their main channel of acquisition is partners, I believe Basecamp+Asana doen't take money for being on their partners page. Both just link out to the websites of partners without any means of "tracking", so that seems a right assumption. If renting an office is more expensive than one monthly salary for one employee you have got yourself a palace, or you strategically choose the wrong city like SF or NY. 65% of my costs are salaries in my company. Looking at Buffers transparent cost report they are similar. From my experience talking to other business owners it is about the same, sometimes higher. Now depending on what profit margin you are targeting, lets say 20% pre-taxes for a bootstrapped business in growth mode (it is "low" because you are re-investing money into the company by hiring people) that leaves 800.000$ * 70% => 560000$ for salaries. More than enough for 7 people.
- PacifyFish 8y ago
  You were disputing the “obviously” claimed for US-based engineers. Most of those are based in SF/Seattle/NY. Move the goalposts as you please.

charlesdm 8y ago

Margins in software businesses are high. All those things combined (especially in Belarus) aren't going to run higher than say 20% of revenue.

PacifyFish 8y ago
Parent comment was disputing the “obviously” claimed for US-based engineers.

beberlei 8y ago

Yes. They are a belarus company, selling to mostly US companies, so probably pay little sales taxes. other taxes are paid on profit, so explicitly after employee salaries are paid. Salaries are usually the largest expense in many IT companies. They don't collect monitoring data or otherwise huge ingest of data from users, their server costs are probably low. Their main channel of acquisition is partners, I believe Basecamp+Asana doen't take money for being on their partners page. Both just link out to the websites of partners without any means of "tracking", so that seems a right assumption. If renting an office is more expensive than one monthly salary for one employee you have got yourself a palace, or you strategically choose the wrong city like SF or NY. 65% of my costs are salaries in my company. Looking at Buffers transparent cost report they are similar. From my experience talking to other business owners it is about the same, sometimes higher. Now depending on what profit margin you are targeting, lets say 20% pre-taxes for a bootstrapped business in growth mode (it is "low" because you are re-investing money into the company by hiring people) that leaves 800.000$ * 70% => 560000$ for salaries. More than enough for 7 people.

PacifyFish 8y ago
You were disputing the “obviously” claimed for US-based engineers. Most of those are based in SF/Seattle/NY. Move the goalposts as you please.