I am a lead software engineer that has been asked to become part of a small pre-seed-level software startup. One of the principals has asked me to come up with a 1-, 3- and 5-year estimate operating budget for a small development team (which would include myself).

I am comfortable doing my own research so long as I know all the different categories + classifications of typical software startup costs. The major categories I can think of are:

  • Labor
    • FT Employee
    • Contractor
  • Tools (IDEs, software licenses, etc.)
  • Services (3rd party SaaS)
  • Infrastructure (servers, SSL certs, etc.)
  • Audits
    • Cyber-security
    • SOC2, business compliance, etc.

Please note that I'm not asking for a list of typical business cost categories, only those that would pertain to the development & maintenance of software in a typical engineering organization (the idea is that I would become the Engineering Manager/Director for the team and hence in control of the engineering budget).

Are there any other major categories of costs that anyone can think of?

  • it's impossible to run a software startup for less than $0.5m a year. that is the bare minimum. nothing is more expensive than programmers. – Fattie Feb 13 '18 at 15:59
  • If the guy actually wants you to quote stuff like tools, your Firebase monthly bill etc, that is quite naive. Just put all that down as 5000 a month. The absolutely overwhelming cost is programmers. Determining the cost of a startup, means, determining how many programmers you need. Sure, at the end just add a small amount for a few laptops, etc. – Fattie Feb 13 '18 at 16:02

Just things I've thought of:

Equipment - Computers themselves (which need changing every 2 years), maybe phones, headsets, comfy chairs etc

Legal - Pat testing for instance (depends on where you are from though I guess)

Remote communication - Probably falls under tools, (GoToMyPC, team viewer etc..)

Also make them aware that testers and technical support will be needed as well, although depends what project you are doing.

Recruitment - Hiring through agencys costs about 10% of the coders annual salary.

Tea, Biscuits and an unlimited supply of coffee :-)

  • "Hiring through agencys costs about 10% " indeed it is often far more than that. – Fattie Feb 13 '18 at 15:59

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