Fractional CTO vs full-time CTO: cost comparison

13 April 2026

Fractional CTO vs full-time CTO is the comparison every SME founder runs at some point, usually after getting a LinkedIn message from a CTO candidate quoting £200k base and 1.5 percent equity. The numbers stop the conversation fast. What they do not always make clear is what the founder is actually giving up by going fractional, and what they are gaining.

The honest comparison is worth working through. Both have the right use case. The mistake is defaulting to full-time because it sounds more serious.

What a full-time CTO actually costs in 2026

A full-time CTO for a £1m to £5m SME in London or Dubai costs £180k to £250k loaded per year. That number includes:

Base salary: £140k to £190k for a legitimate senior hire
National insurance: roughly 13.8 percent on salary above £9,100
Pension contribution: typically 5 to 8 percent employer contribution
Benefits package: private health, equipment allowance, learning budget
Recruitment cost: headhunters charge 20 to 25 percent of first-year salary, typically £28k to £47k as a one-off
Equity: CTOs at this stage typically receive 0.5 to 2 percent with a four-year vest

That is £180k to £250k per year plus a £40k one-off recruitment cost plus equity dilution. For a business doing £1m revenue, that is 18 to 25 percent of revenue going to one hire.

What a fractional CTO costs

Fractional CTO services at twohundred.ai run £24k to £60k per year. Foundation tier is £2k per month, Growth is £3.5k, Dominance is £5k. No equity. No recruitment fee. No notice period. No national insurance. No benefit overhead.

The market range for fractional CTOs across the industry sits between £1.5k and £8k per month depending on the scope and the seniority of the person. At the low end you are getting five to eight hours per month of advisory work. At the high end you are getting a near-full-time engagement without the employment relationship.

What the fractional model gives up

The fractional CTO vs full-time CTO comparison is honest about the trade-offs. A fractional CTO cannot:

Manage your engineering team day to day. If you have a team of five developers who need a technical manager in the room every morning, a fractional CTO is not the right structure. You need someone full-time who can run standups, manage delivery, and be available for the team hour by hour.

Own the company culture and sit at the leadership table full-time. A full-time CTO is on your leadership team, in your all-hands, part of the culture. A fractional CTO is a very senior external collaborator who takes the technology decisions off your plate but is not inside the day-to-day.

Scale with you to 50 people. At some point, usually when you have a team of eight or more developers, a full-time CTO makes financial sense. The fractional model is built for the 0 to 15 developer stage.

What the fractional model keeps

The fractional CTO model keeps everything that actually matters at the SME stage.

All the strategic work. Architecture decisions, build-versus-buy calls, technology roadmap, AI implementation, investor documentation, developer hiring criteria. Everything a full-time CTO does strategically, a fractional CTO does for 10 to 25 percent of the cost.

Cross-business pattern recognition. A fractional CTO working across three clients simultaneously has seen the same problem twelve times this year. A full-time CTO at your company has seen it once. That pattern recognition accelerates every decision.

Speed. Eight of our 12 clients had a working system live in the first three weeks. A full-time CTO spends the first three months in onboarding.

The break-even point

The full-time CTO vs fractional CTO break-even typically arrives when the engineering team is large enough that day-to-day technical management is a full-time job on its own. For most SMEs that is around 8 to 12 developers. Below that number, the fractional model delivers the same strategic output at a fraction of the cost.

A second signal is when the technology function is complex enough to require dedicated leadership beyond working sessions and build time. A business running 12 engineering squads on a mission-critical product genuinely needs a full-time CTO. A business with two developers and a SaaS stack needs the fractional model and is wasting money on a full-time hire.

Frequently asked questions

Is a fractional CTO as good as a full-time CTO?

For the strategic work, yes. For day-to-day team management, no. A fractional CTO makes the technology decisions, sets the architecture, and ships the systems. They do not manage your engineering team hour to hour. If your primary need is strategic technology leadership without a large engineering team, a fractional CTO delivers the same outcome at 10 to 25 percent of the cost.

When should I switch from fractional to full-time?

When your engineering team reaches 8 to 12 developers and you need day-to-day technical management alongside the strategic work. Until then, the fractional model is more cost-effective and, in most cases, faster to impact.

Can a fractional CTO become our full-time CTO later?

Yes, this is a common transition. The fractional CTO has already audited the stack, set the architecture, and built the initial systems. Transitioning them to full-time eliminates the recruitment cost and onboarding ramp.

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