One of the most important roles in your organization is vCIO, for it encompasses a range of important responsibilities, including relationship management, client education, and life-cycle budgeting, many of which are essential to your organization’s success. Finding someone who can consistently deliver results as your vCIO requires not only time, but also financial wherewithal.
Once you find the right person to be your vCIO, one of your next steps is to set compensation for that individual, but if you’ve never hired a vCIO before, this may be a little of a daunting task, especially when there’s a lot of pressure on you to hire someone capable of building strategic relationships, which would in return generate new monthly recurring revenue (MRR) at the right price for your business. In fact, you may even be unsure of how to proceed.
While there’s no right or wrong way to compensate your vCIO (compensation varies on many factors), there are some best practices you should follow to ensure that one of your top roles in your organization is paid appropriately.
For instance, a vCIO should be paid based on experience and the results of the role, which is why vCIOs are typically paid a salary in addition to a variable pay component (based on MRR managed, reaching a non-recurring revenue target, or retention).
Here are some other factors to consider when determining compensation for your vCIO :
- MRR managed (a vCIO should be able to manage at least $150,000 of MRR).
- Non-recurring service revenue from the account base (as a rule of thumb, you should be able to generate 25-30 percent of MRR in professional service revenue). This is critical because it gauges the relationship the vCIO has with your customers. If a vCIO is not making the right recommendations or if the customer does not accept the recommendations, it’s the result of a vCIO process in need of repair.
A vCIO’s salary does vary from MSP to MSP. Unfortunately, there isn’t a one-size-fits-all approach to setting a vCIO salary. Now, I oftentimes get asked about the average pay of a vCIO. While it’s typically between $60,000-$150,000, I strongly encourage you to consider the above factors when setting a salary for your vCIO.