My business makes $2.2MM ARR and has 17 employees (counting the founders). We're profitable, although we try to put about as much money as we can afford back into growth, so we're right around break even. There are a number of factors to consider when thinking about whether this is "enough" money.
Location - We're based in St. Louis which has significantly lower cost of living than, say, the Bay Area (we moved from SF for this reason). St. Louis is much more expensive than some other parts of the world. So the amount of revenue a company "needs" is highly dependent on where it's located.
Types of employees - More than half of our employees are on the support team, and almost every came in as an entry level employee right out of college. We pay our support people very well (almost as much as the engineers) but it's definitely cheaper to employ a handful of entry-level support people vs. senior engineers. I think it's a common mistake to think that every startup is made up entirely of engineers.
Revenue per employee - Right now we're at about $130k ARR per employee, and like I mentioned, that's close to break even. If we keep growing somewhat quickly, we'll bring in enough new entry-level employees at lower salaries to bring the average down. But as our growth slows (which is happening, and happens to everyone eventually), our team becomes more and more senior and so we pay them accordingly. For this reason, I think we'll need to shoot for a higher $/employee. But not much higher I don't think. I bet $200k/employee would cover us long-term.
"Maximizing shareholder value" - One of the things that drives most tech companies to make so much money is that their primary goal (regardless of what their mission statement says) is to maximize shareholder value. When you're bootstrapped, you can choose not to do that. I work full-time as a founder/CEO and get paid well (probably about what I'd be making working for someone else, maybe a bit less). If I wanted to become a billionaire, then yeah, this business model wouldn't work. But that doesn't have to be the goal.
To be more specific, we start our support people at $53k/year and guarantee $10k/year raises for their first five years. We start engineers at $71k and guarantee the same $10k raises. So engineers are definitely making more, but in terms of the fully loaded costs to us, they're not that different.
St. Louis has a tech community, but it's pretty small, and there aren't very many people who have already experienced success. As a result, while there are a lot of the normal startup things like co-working spaces, networking events, etc., it isn't a particularly big part of life unless you really want it to be. It's easy to meet people who work in other industries, and I think people generally don't link their personal identity to their employer as much. I also think more people find satisfaction in non-tech work (like customer service, teaching, etc.). I consider this to be a more healthy and hopefully sustainable environment.
Having said that, it's a bit funny because many people in the tech scene here haven't experienced the Bay Area and they think STL is sort of "the next silicon valley" which is just so hilariously not true. I view that as a good thing because I left SF for a reason, but I do wish people would stop pretending that it's a first-class tech hub. It's just a great mid-sized city with roughly the same number of tech jobs as any other mid-sized city.
The company is based in Belarus where salaries are lower than US: https://blogs.elenasmodels.com/en/average-monthly-salary-in-...
Not every employee must be a high paid engineer. And there are certainly non SV based engineers that are totally fine with less than 100k $ per year?
Being based in Germany, I calculate around 100k€ revenue per employee myself, maybe a bit more.
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.
Some of your list is silly. My electricity bill is $25 per month. My rent is $800 per month. I choose a smart place to open a startup, not SF.
it's completely unknowable. ARR is not enough data.