Software is typically the second-largest operating expense for early-stage companies, behind personnel and consulting. In many cases, companies spend more than 4% of total burn on software alone.
Attivo recently completed a comprehensive benchmarking analysis across more than 240 early-stage clients and observed several notable patterns in software spending:
- The fastest-growing companies spend approximately 2x more on software than the slowest-growing companies
- Software spend is relatively consistent across market sectors, averaging $12,000 per employee per year
- Series B companies exhibit the highest software spend per employee, at approximately $18,000 per employee per year, compared to Seed, Series A, and Series C companies
As companies prepare their 2026 annual budgets, software spend warrants deliberate review. Organizations should evaluate current spending levels, assess alignment with upcoming growth initiatives, and determine where resources should be allocated, optimized, or reduced across the software stack. Comparing internal spend to external benchmarks can provide useful context for whether costs are aligned with a company’s funding stage, revenue profile, and market sector.
As early-stage companies scale, software spend almost always increases. Tools are introduced to replace manual workflows, support new hires, and add structure to operations as complexity grows. Individually, these decisions are often rational. Over time, however, the associated costs tend to compound.
What is often missing is context: how much software spend per employee is typical for companies at a similar stage? For many early-stage teams, that benchmark is not readily available.
Attivo’s benchmarking program is built on operating data from early-stage companies and is designed to provide that context. In this paper, we apply the data to one of the most consequential and least scrutinized areas of spend: software.
How We Define Software Spend
In Attivo’s benchmarking dataset, software-related expenses include three categories of operating spend reflected within Operating Expenses.
- Software Subscriptions (approximately 75%): Subscription-based tools used to automate and manage core business processes across engineering, sales, marketing, finance, and operations. Many of these tools are priced on a per-seat basis. Increasingly, software vendors also charge based on usage, causing costs to scale quickly as teams grow and product usage expands.
- Hosting and Infrastructure (approximately 22%): Primarily cloud hosting expenses, with AWS representing the largest share of spend, followed by Google and Oracle.
- Employee Equipment (approximately 3%): Computers and related hardware purchases used by employees.
AI-related tools are included when expensed as operating software, such as costs associated with model development or training. Across the dataset, AI tooling represents approximately 5% of total software spend.
The Benchmark That Matters: Software Spend per Employee
Why do the fastest-growing companies spend more on software per employee?
Among companies with more than $1M in annual revenue, median software spend is approximately $27,000 per employee per year. Companies in the top quartile of revenue growth (median 126% annual revenue growth) spend roughly 2x more per employee on software than companies in the bottom quartile (median 5% annual revenue decline).
Operating model also plays a significant role. Fully remote companies spend nearly 3x more per employee on software and equipment ($17.1k) than companies that operate fully in-office ($6.4k).
The following observations help contextualize these patterns and are relevant inputs for 2026 budgeting and planning.
1. Software as a Scaling Lever
High-growth companies tend to treat software as enabling infrastructure rather than a fixed overhead cost. Increased spend is often concentrated in hosting and automation—such as cloud infrastructure and SaaS tools—that support higher productivity and operational scale without a proportional increase in headcount.
2. Higher Software Spend and Capital Efficiency
Despite higher software spend, top-growth companies frequently exhibit stronger capital efficiency. Investment in systems such as CRM platforms, automated billing, and deployment and integration tooling can allow revenue to scale faster than operating burn. In practice, software-enabled processes often prove more efficient than incremental headcount additions.
3. The Cost Structure of Remote Operating Models
Remote-first companies incur higher software and equipment costs to support a “digital headquarters.” These costs typically include collaboration tools, documentation platforms, enhanced security and compliance systems, and employee equipment.
This cost premium is structural rather than inefficient. Digital collaboration, security layers, and device management substitute for physical office infrastructure. The implication is not that remote work is inherently more costly, but that its cost profile is distinct and should be explicitly planned for.
Why Software Benchmarks Break Down at the Early Stage
Most available benchmarking data is designed for later-stage companies with stable and consistent revenue. These benchmarks typically measure software spend as a percentage of revenue—a metric that is often not meaningful for Seed, Series A, and early Series B companies.
At earlier stages, revenue is frequently limited, uneven, or intentionally deprioritized, which can distort revenue-based comparisons. When benchmarks are segmented by funding stage, software spend per employee is often a more practical and consistent way to evaluate efficiency.
Across Attivo’s anonymized dataset of more than 240 early-stage companies (Seed through Series C), software spend per employee varies significantly:
- Series B companies spend more than $18,000 per employee per year (median). At this stage, organizations are scaling rapidly and software costs tend to increase as complexity grows. In practice, Series B often represents an infrastructure transition, where companies replace early-stage tools with more robust systems—such as ERP platforms, advanced security tooling, and SOC 2 compliance solutions—to support a larger organization.
- Most efficient companies: approximately $5,000–$7,000 per employee per year
- Median: approximately $12,000 per employee per year
- Least efficient companies: approximately $25,000–$30,000 per employee per year
Taken together, this reflects roughly a five-fold difference between the most and least efficient companies.
This is not an argument that lower spend is inherently better. Rather, it highlights a visibility issue. For many founders, this analysis provides a first clear view of how quickly software costs can compound relative to team size.
For a 10-person company, a $20,000 per-employee variance translates to more than $200,000 in annual spend—often comparable to the cost of an additional hire—frequently without a clear understanding of where that spend is accumulating.
As discussed earlier, efficiency in software spend does not always correlate with the fastest growth. Benchmarks are most useful when they help founders understand where their company sits relative to peers.
Software spend should ultimately be evaluated in the context of growth plans, operating priorities, and available cash, rather than in isolation.
How Does Software Spend Vary by Market Sector?
Across the primary market sectors that Attivo serves, software spend per employee is relatively consistent. Health Care / Life Sciences, Web3 / Crypto, and Enterprise Software companies each report median software spend of approximately $13,000 per employee per year. This range includes companies from pre-revenue through approximately $25 million in annual revenue.
AI and Machine Learning companies represent a notable exception. Across the dataset, these companies exhibit the lowest median software spend, at approximately $11,000 per employee per year.
By comparison, enterprise-focused companies tend to spend more, with median software spend closer to $14,000 per employee per year, likely reflecting higher hosting requirements driven by greater traffic volumes and enterprise-grade performance and reliability demands.
Why Software Spend Creeps Up
In our experience, increases in software spend are rarely the result of a single decision. More often, they occur gradually as organizations scale:
- Manual processes are automated over time
- New tools are added as teams and functions expand
- Ownership and oversight of subscriptions become unclear
As a result, software spend tends to increase unless it is reviewed intentionally.
How Founders Should Use This Benchmark
During budget reviews, software spend per employee is a useful reference point for understanding where costs may have scaled faster than the organization itself.
Before finalizing an annual budget, founders should consider the following questions:
- What is our current software spend per employee?
- How does that compare to companies at a similar market sector, revenue level, and funding stage?
- If spend is meaningfully above peer ranges, what is driving that variance? And what tactics can we implement to reduce spend per employee?
Variance on its own is not inherently an issue. What matters is whether differences reflect deliberate operating tradeoffs or the accumulation of inefficient decisions over time. As budgets are finalized, reviewing software spend per employee alongside a CFO or finance lead can help identify when deeper analysis is warranted—particularly when costs sit meaningfully outside peer benchmarks.
Next Steps
As part of the budgeting process, founders should work with their finance teams to understand how their company’s software spend compares to peers. Where this data is not readily available, external benchmarks can provide helpful context.
Attivo Partners supports early-stage companies with accounting, benchmarking, and financial analysis to help teams better understand their operating spend. For companies interested in more detailed benchmarking across industry, funding stage, and revenue size, Attivo can provide a complimentary benchmarking analysis. Contact us at info@attivopartners.com.
