The Problem
You walk into the board room with your engineering budget slide showing $150K per engineer, and your CFO is already doing different math. When the board asks “Can we get this cheaper offshore?” you realize your slide is missing 40% of the actual cost.
That $150K becomes $272K in year one after benefits, recruiting, ramp time, tools, infrastructure, and overhead. Offshore “savings” evaporate after coordination costs and turnover, with most CTOs citing a real multiplier of 1.8x to 2.2x base salary for fully loaded cost.
The deeper problem isn’t missing line items but showing salary without connecting to business outcomes. When the board only sees input costs without output value delivered, they view engineering as a cost center to optimize rather than an investment driving revenue.
Eight CTOs managing teams from 8 to 2,000 engineers describe budget conversations that fail because the numbers tell an incomplete story.
What Engineering Leaders Are Saying
The Total Cost Reality
Bob B., CTO: “There’s costs, so there’s TCO, and you balance the TCO with who meets the majority of requirements. And then we work that to a business case that can be presented to a board or to CFO.”
Robert E., CTO: “What we’re trying to do is understand what is the true cost so that when we sell it in the marketplace, we could be able to tell you your true profit.”
The Hidden Costs
Ken R., CTO: “The cost of finding a defect further down in the pipeline is much more expensive, especially in production. Really expensive to identify an issue in production. It’s customer impacting.”
Cydni T., CTO: “My junior engineers who have embraced AI are surpassing the speed of my senior engineers who haven’t. And they are more expensive and they’re going to be at risk.”
Connecting to Business Value
Russ F., CTO: “The ROI is great, but that’s a very quantitative measure. You have to take the qualitative piece too. Like, did I make your job eight times harder? But it’s cheaper.”
Ryan R., CTO: “There was no cost for acquisition. There was no churn rate. There was no lifetime value of a customer. I had to learn marketing metrics to prove my engineering team’s value.”
Jason B., CTO: “Being able to sit across the table from a customer and really tie out the, does this drive value for you? How does it help you grow your business? Is quite satisfying.”
What Actually Works
The CFOs who approve engineering budget increases aren’t looking at salary lines. They’re looking for the connection between what you spend and what the business gets.
Show them fully loaded cost per engineer so they know you understand the real numbers. Then show productivity metrics that prove delivery: deployment frequency, mean time to recovery, percentage of work that’s rework versus new features. Finally, translate those metrics into business language with actual dollar amounts from revenue enabled, churn prevented, and costs automated away.
Kevin S. built his Costa Rica team 14 years ago with 10+ year retention because he invested in culture upfront. That eliminated the turnover tax where 18-24 month average tenure means constantly paying recruiting and ramp costs, while time zone coordination and communication friction add delays that turn cheap hourly rates into expensive reality.
Use This Right Now
Open your last quarterly board deck. Find the engineering budget slide. Now add three rows below the salary line:
- Row 1: Fully loaded cost per engineer (multiply salary by 1.8x-2.2x)
- Row 2: Delivery health (deployment frequency, mean time to recovery, rework percentage)
- Row 3: Business value delivered (pick one: revenue from features shipped, churn prevented by critical fixes, or costs eliminated through automation)
Calculate your ROI by dividing row 3 by row 1. If that number makes you uncomfortable, you know what metrics to start tracking this week before your next board meeting.
What Your $150K Engineer Actually Costs (And Why Your CFO Already Knows), from Sonatafy’s Engineering Intelligence Hub. Insights drawn from over 160 CTO interviews on Software Leaders UNCENSORED. Practical tools for technical leaders navigating budget planning and team justification. Explore more at sonatafy.com/software-solution-directory/
