There’s a simple rule of thumb you can use to gauge the financial health of a software product company (yours, or someone else’s): The number of developers in a software company should be about equal to the the company’s revenue in millions. If the company has $10 million in annual revenue, then it should have about ten developers. For a startup in growth mode, you can use the revenue run rate rather than the revenue to date.
A couple of caveats:
How do you use this $one million-to-one developer ratio?
Do you have finance-related rules of thumb you use or recommend? Let me know about them in the comments!
Your host and author, Nils Davis, is a long-time product manager, consultant, trainer, and coach. He is the author of The Secret Product Manager Handbook, many blog posts, a series of video trainings on product management, and the occasional grilled pizza.
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