Tech compensation and revenue per employee across four cities

This article compares engineer and designer total compensations across four diverse regions, each with significant tech talent pools. These compensation values are then

compared with leading and typical tech company revenue per employee estimates. It’s meant to provide reference for engineers, designers, product managers and other tech professionals to consider sustainable and unsustainable value of their work. In particular, it highlights the challenges of current trends of simply relying on cost-of-living differences of 10-30% between US cities. #techcompensation, #techsalaries, #engineeringsalary, #designersalary, #productmanagersalary, #techindustry, #costofliving, #remotework, #techcareer, #technews

The value of hiring tech specialists in the San Francisco Bay Area is frequently compared to in-person and remote workers in other regions. Rather than argue for or against a cost-cutting approach, this article is an estimate of the financial sustainability of hiring tech specialists for organizations. In addition to cost of living considerations, founders, investors and other hiring leaders typically consider cultural & language proximity, regulatory & legal ease, time zone alignment, talent pool & skill set, brand perception, political & economic stability and a plethora of other considerations when building their teams.

Figures 1 & 2 show typical total compensations (base salary, bonus and equity) for reference tech workers – Product / UX Designers and Full Stack Engineers. 25th percentile, median and 75th percentile compensations are shown for the SF Bay Area compared to three other frequently considered cities with significant tech talent pools:  Denver USA, Vancouver Canada, and São Paulo Brazil. All compensation data are from Levels.fyi [1]. Dotted red lines in each figure show break-even compensation estimates based on revenue per employee values. Top 10 software organizations range from Apple (at #1) with an estimated $2.4 M of revenue per employee and Intuit (at #9) with an estimated $735 k of revenue per employee [2]. These are significantly higher than the global average of $160 k of revenue per employee [3]. Assuming a 50% overhead for health care, payroll taxes, etc. based on my personal experience in tech management and investment analysis, I half these revenue numbers to get rough break even estimates of $367 k and $80 k, respectively. These estimates suggest that San Francisco based tech workers likely need a strong commitment to innovation to stay competitive. Tech workers in regional US tech hubs, such as Denver, likely have a tricky balancing act because they may be more expensive than other hubs without the leading ecosystem advantages of the San Francisco Bay Area.

Figure 1: Comparing tech designer compensation against top and global average break even estimates based on organization revenue / employee

Figure 2: Comparing tech engineer compensation against top and global average break even estimates based on organization revenue / employee

[1] Levels.fyi Salary Estimates https://www.levels.fyi

[2] Top 10 US revenue per employee (Apple #1 @ $2.4 M; Intuit #9 @ $735 k; KLA #10 @ $657 k revenue / employee) https://www.linkedin.com/posts/tradingview_10-tech-companies-with-the-highest-revenue-activity-7036440795452710912-m8Ob/

[2] Global average revenue per employee ($160 k revenue / employee)

https://www.statista.com/statistics/936887/software-professional-services-worldwide-revenue-per-employee/#:~:text=Revenue%20per%20employee%20of%20software%20professional%20services%20firms%20worldwide%202015%2D2022&text=In%202022%2C%20the%20average%20revenue,160%2C000%20U.S.%20dollars%20per%20year.