One of the things we’re incredibly excited about at Buffer is transparency. A big part of that is because being transparent simply feels like the right thing to do, intuitively. That by itself, seems reason enough to pursue it.

We’ve seen some incredible things happen since we started to focus more on transparency in the last few years. Joel wrote a great article about transparency a while back, with the fitting quote about what transparency triggers:

“Transparency breeds trust, and trust is the foundation of great teamwork.”

To put things into perspective, here are a number of things that we’ve made transparent so far:

Right here on the Open blog, we also share openly about many other areas that you can browse and read through at any time.

If we think about all the things we’ve made transparent, they oftentimes largely affected team members and partners directly. And we’ve been absolutely overwhelmed by the kind encouragement from customers and anyone who came across our transparency changes.

Extending transparency to customers and people using Buffer

Extending transparency directly to our customers, by making it very easy to understand why something costs as much as it costs, hasn’t been something we’ve done before. And exploring that idea always got many of us very excited.

A quote Joel shared with us comes from Semco, which deeply resonated with me and a lot of other team members:

“On several occasions I have taken our internal profit calculations out of one of the director’s briefcases and given the customer a copy. Here is what we plan to make as a profit, I’ve said. Do you think it’s too much? What do you suggest? What should we do? Many times this is the first occasion in which a customer has seen a profit calculation, and he’ll pinch himself. But this strategy almost always succeeds.” – Ricardo Semler, CEO of Semco, Inc.

What’s even more interesting is that some amazing companies have already started to do this even more pro-actively. One great example is Everlane, which shares very explicitly how their prices for their clothes come about. Check out their Slim Sweater Blazer for example (which I really like btw!).

What’s interesting with both Semco and Everlane is that they have clear fixed costs – they produce physical goods and how a price comes together is very helpful to have broken down.

With building software, it’s often more obscure with what goes into producing an app or a product. With every new “unit” that you produce, you don’t necessarily incur more costs, so setting a price can often seem arbitrary.

We tried to change this and think hard about what someone pays for when they purchase a Buffer subscription.

What your money is used for when you purchase a Buffer subscription

Breakdown of the costs which your paid Buffer plan helps us to cover:

blog-postnew

 

The table below breaks down our monthly costs and equates each cost to the portion of the $10 Awesome Plan subscription payment. So we can see below how much of the $10 goes to each of our costs:

Monthly Cost Percentage of Monthly Cost Cost as portion of $10 Awesome Plan Payment 
Team Member Salaries $223,939.74 65.6% $6.56
Servers $22,890.76 6.7% $0.67
Retreat $17,588.15 5.2% $0.52
Fees to Stripe $13,885.42 4.1% $0.41
Advertising & Marketing $6,302.40 1.8% $0.18
The Tools We Use $14,161.79 4.2% $0.42
Health Insurance / Workers Comp $6,635.93 1.9% $0.19
Office Rent $7,175.53 2.1% $0.21
Payroll, Legal, Accounting $5,883.06 1.7% $0.17
Computer and Equipment $2,577.81 .8% $0.08
Kindle books & Culture $1,593.5 0.5% $0.05
Internet $1,292.58 .4% $0.04
Office Supplies & Community $1,120.48 .3% $0.03
Other $488.79 .1% $0.01
Profit $15,666.63 4.6% $0.46
Total $341,202.56 100% $10.00

Let’s break it down a bit further and talk about what each item contains and amounts to. Here we go:

Team member salaries: $6.56 = 65.6%

As you can see from above, team member salaries makes up 65.6% of any $10 that we receive from an Awesome plan payment. Our total monthly cost for salaries is $233,939.74.

The way we come up with salaries is that we have a simple salary formula to determine each person’s salary when they join Buffer. Here is a breakdown of how this works out for individual team members:

salaries

 

If we break this down even further and group the individual people by the area that they work in, we would get this breakdown:

salary area

 

You can see that 32% of our total salary costs are for support, 60% are for product development and 8% of the cost goes towards marketing.

It will be interesting to observe how this split changes over time as we grow the team based on various needs we see emerging.

Servers and Hosting: $0.67 = 6.7%

The Buffer product is built on top of many services hosted on Amazon Web Services. Here are some of the AWS tools we use:

  • Elastic Beanstalk
  • EC2
  • SQS
  • Redshift
  • Elastic Map Reduce
  • Route53
  • S3

We have about 60 of our own EC2 servers continuously running. We use Compose to help host and maintain our production application database.

Our AWS bill for October was $10,740. Our Compose bill has grown considerably since the start as our user base has grown. Our production database is the core of what we’ve built, we make sure this is provisioned to scale. With the help of MongoHQ’s expertise we’re able to ensure our database scales as our usage grows, is speedy and highly available (through the use of replication and backups). If an unforeseen circumstance occurs, we have options to automatically fail over or recover with backups. We look at them as our database ops team so we can focus on Buffer. So to break it down into the main two expenses that make up “hosting”, we get:

  • Compose.io: $13,486/mo
  • Amazon Web Services: $10,740/mo

Our monthly cost for servers and hosting is $22,890.76 on average per month, which is 6.7% of our total costs

Retreats and Culture: $0.56 = 5.6%

As Buffer is a fully distributed team, a lot of the traditional and oftentimes great ideas to make team members’ lives easier don’t quite work for us.

Instead, we’re doing a number of things to help us build a stronger team and great working environment that work well for distributed teams. Here is a rough breakdown:

  • Retreats: Every 5 months we go on a team retreat. The whole team gets together for about 10 days, works on fun projects and also gets a chance to bond in person. More about retreats here. Here is a breakdown of the cost of our most recent retreat in New York City in September:
Category Expense
Hotels $55,000
Flights $25,000
Lunches $3,500
Dinners $7,000
Activities $15,000
Co-working Space $8,000
Total $113,500

 

Since we don’t go on a retreat every month, we’ve averaged out the amount, and it comes out at around $15,775.94 (that’s about 88.5% of the total culture and employee perks breakdown).

We have two more unique Buffer perks that account for a smaller percentage of the total:

  • Free Amazon Kindle and the Kindle Books program: Everyone at Buffer gets a Kindle at the start of their journey with us and they can then can request any Kindle book at any time and Buffer will gift it to them for free. We’re roughly spending $400 on this every month, and it’s been incredible valuable.
  • Jawbone UP: Whenever someone joins the company, they will get a free Jawbone UP wristband, to help them track sleep, steps, weight and more. We also share stats with internally with the team. Each Jawbone is about $150, and there’s some wear and tear so people roughly replace theirs once a year through this program.

Averaged out, this comes to $19,181.65 per month, which is 5.6% of our total monthly costs.

Operations (legal + accounting): $0.36 = 3.6%

We work with some fantastic teams outside of Buffer who help us with some key tasks, such as legal, accounting and payroll, and health care benefits.

Here’s how it breaks down roughly:

  • Accounting, payroll, expenses, finance – cost: $3,428: We feel very grateful to be working with the team at Foresight, who take away a huge amount of work when it comes to these tasks. They do a fantastic job and are very responsive. I would say the work they do is the equivalent of at least 1-2 full-time team members.
  • Legal – cost: $2,455: Another crucial amount of help we get is on the legal front from the team at Wilson and Sonsini. We’ve been working with Yokum and his team for over 3 years (he writes a phenomenal blog with help on fundraising and any questions about legal and startups). As you can imagine, because we’re so transparent, being able to work with someone that helps us figure out some of these changes to a more open and transparent company from a legal perspective is incredibly helpful.
  • Health care and workers comp – cost: $6,635.93: We offer all team members health benefits that we cover 100% (and 50% for dependents). What’s interesting about this is that the amounts we pay for health care per team member varies greatly by country and even state. Within the US, it’s around $400-500 per team member, and for Steven, who lives in Taipei, it’s only around $35/mo to cover his health care costs. Truly fascinating how systems work around the world!

Averaged out, this comes to $12,518.99 per month and makes up a total of 3.6% of our monthly spending.

Merchant Fees to Stripe: $0.41 = 4.1%

One of the services we’re incredibly grateful for is Stripe. They make it super easy for us to handle payments coming in, changing plans, providing refunds and more.

As you can see, they make up about 4.6% of the total amount of any $10/mo payment (or any other payment) we receive from our awesome customers. Stripe’s standard fee’s are 2.9% + $0.30 and luckily, since we’re processing a larger amount (~$450k/mo), they gave us a discount. Right now, this is what we’re paying Stripe:

2.2% + $0.30. On a regular $10/mo payment, that would mean that Stripe takes around $0.56.

Averaged out, this comes to $13,885.42 per month, which is 4.1% of our total monthly spend.

Distributed team and office costs: $0.36 = 3.6%

Office expense is a very interesting one, as the Buffer team is completely distributed. We rely on a lot of amazing tools that help us create a vibrant place to work and live for everyone. Here is how it breaks down

  • Office in San Francisco – cost: $7,175.53: San Francisco is the only place, where naturally about 6 people of the team have chosen to live, which we felt makes it worthwhile to maintain a small office in the SoMa area. Even so, only about 2-3 people work from the office at any given time and it might be up for discussion soon whether keeping an office going is the right thing to do.
  • Computer and equipment – cost: $2,577.81: Buffer provides every team member with any computer or laptop of their choice as well as any additional equipment such as keyboard, phones for testing, etc.
  • Office supplies and community – cost: $1,120.48: Our amazing Community Champion Nicole works with the Buffer community and sends them amazing, hand-written thank you cards, as well as T-shirts and stickers.
  • Internet – cost: $1,292.58: Buffer team members can expense their internet bill for their house or flat, as most of them work from home, which makes up this part of the cost.

Averaged out, this comes to $12,166.40 per month, which is 3.6% of our total monthly costs.

Advertising and Marketing (mostly Google Ads): $0.18 = 1.8%

We spend a bit on marketing, although we’ve cut back on paid marketing the last few months. We might get back into it a bit more in the future. Earlier in 2014, we experimented with much more money that went towards paid marketing, including Google Ads, Facebook Ads and Twitter Ads. We couldn’t quite make them work to be profitable so we scaled back.

Since then we have switched our focus mostly to our own brand terms and we’re spending around $4,500/mo for the last few months. I believe that some team members are quite excited to experiment with it again more soon. Excited to see what we learn here!

Averaged out, this is $6,302.40 per month, 1.8% of our costs.

The Tools We Use: $0.42 = 4.2%

We’re grateful to rely on so many amazing tools to keep us running here at Buffer. The tools and subscriptions we pay for help with everything from managing our customers’ happiness to staying connected as a distributed team—and everything in between.

All told, in October, we counted 33 wonderful tools and subscriptions into our expenses.

Before we get to the individual breakdown of the tools we use (and how they fit in our pricing puzzle), we thought it’d be neat to share how the use of tools is spread out among four main areas at Buffer.

Here’s the breakdown of tools and subscription expenses among technology and engineering, marketing, customer happiness, and distributed team tools.

tools

Tech gets a big piece of the pie due to some of our larger reporting and management tools like Looker, Mortar Data, and New Relic. Mortar data is something we’re experimenting with to power our ability to quickly analyze and transform large amounts of data. Our Mortar bill is split between using their service and the actual AWS EC2 server instances we use.

New Relic is used particularly as a compliment to AWS monitoring. It provides us a deep way to monitor application response times and up-times, transaction traces in case we need to dig in further and will help alert us if we see a rise in error rates. This ensures we’re proactive and on the case at the slightest inkling of an issue.

Marketing’s most significant chunk comes from our subscription with the SendGrid email service, which powers all of our transactional emails as well as the marketing emails that we send to Buffer users.

Here is the complete breakdown of the tools and subscriptions we paid for in October. In addition to the services below, there is also a handful of services we use that wished for us not to disclose pricing information. The total monthly expense on those services is $5,200.

Service Expense
New Relic $4,389.40
Mortar $3,231.48
SendGrid $1,451.07
Qualaroo $747.00
Pusher $399.00
Help Scout $375.00
Digicert $299.00
Google $287.33
Sqwiggle $209.73
Mailchimp $204.00
Eudaemonic $199.00
Olark $151.00
Pagerduty $124.80
Github $100.00
Digicert $83.00
Uservoice $80.00
Statuspage.io $79.00
Cloud app $76.35
Wufoo $69.95
Hipchat $50.00
1Password $49.99
Citrix $49.00
Hively $49.00
Zapier $49.00
Bill.com $48.34
Freshbooks $29.95
Xero $25.50
TypeForm $25.00
Zapier $15.00
Sidekick $10.00
Adobe Systems $9.99
Askmt $5.00
Undisclosed Tools $5,200.00

 

Note: Most of the dollar amounts above are monthly rates. A few, like 1Password, are annual or one-time fees.

Averaged out, this comes to $14,161.79 per month, 4.2% of our total monthly costs.

Profit: $0.46 = 4.6%

One of the most interesting numbers that we can show to customers, I believe, is how much profit we’re making. Through running Buffer, from a financial standpoint, we want to accomplish a few things:

  • Offer a fair price to our customers
  • Build a sustainable business that can fuel its own growth
  • Give back a fair return to our investors over time

We feel that with the current profit numbers we’re achieving almost all of our goals very well and are excited to keep doing what we’re doing for a long time. I’m particularly interested to hear from you in the comments how our amount of profit makes you feel!

Our average monthly profit is $15,666.63, which is 4.6% of total costs..

Where do we go from here?

Other than for accounting purposes, this is the first time we’ve ever broken down every cent of our costs and made it easy to understand, both for ourselves and for you, our customers and followers. Until we spent this time to clearly outline the costs and breakdown, we really didn’t have a good idea of how our money was spent. This now puts things into perspective. Here’s the same graphic now with percentage breakdowns:
blog-post-percentage

One of the things we’re really excited about is to charge our customers a price that is fair and that allows us to keep working hard on Buffer. Knowing the exact breakdown and tracking it over time consistently might help us to adjust prices, so we can offer Buffer’s tools to the widest audience possible.

It’d be also great to hear from you on what things might stand out about our costs and how we operate and whether there’re things you see we could improve on.

Thanks for being part of this incredible journey with us, exploring a new way to do business and making things as transparent and accessible as possible.

You can check out our transparent pricing in action on the Awesome Plan and on our Business plans.

—————-

PS: Final note and details on the method used for our calculations::
We had a few options on how we could break down a single $10/mo payment and we considered the following:

  • Our true SaaS MRR (currently at $410k/mo), which simply combines the monthly payments of all currently paying customers. More on this here.
  • Our Bookings Revenue (currently at $470k/mo), which is the total money we receive on a monthly basis, which includes full yearly payments.
  • Our accounting MRR (currently at around $405k/mo): which is total money received, with yearly payments evened out, as well as “half” payments, of people switching between plans, etc.

For this calculation, we went with our accounting MRR, and we took the last 6 months (June-November of 2014) and then averaged out the payments, which ended up at $341,202.56. This way, we can also show a better reflection of things like retreats, or other one-off or more rare payments. When they are evened out, they show a more holistic picture of everything that’s going on inside Buffer.

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Written by Leo Widrich

Co-founder and COO at Buffer. I enjoy writing about Buffer’s lessons learnt, social media tips and updates to Buffer. For some more personal posts, check out leostartsup.

  • That’s amazing how transparent you are. We can learn so much from this and I think every business owner can take you as example.

    That’s why I decided monthly growth reports on my site two, thanks a lot.

    • LeoWid

      Thanks so much for stopping by and for the kind words Philip-Daniel!

  • Marcin Zaremba

    Awesome insights. Will use it to model our own saas ideas

    • LeoWid

      Sounds great Marcin, let us know what you discover when exploring them!

  • Adam Brooks

    Great to see you guys stepping up the transparency another notch and leading the field (even if others were first in some respects).

    • LeoWid

      thanks Adam!

  • Just imagine how much you’d save if you all moved to Taipei :P

    • LeoWid

      Ha, one of our team members Steven is already there, maybe we should join him! :D

  • Pavel Pravdin

    Amazing transparency, thanks !

  • Interesting that even with the whole transparency thing going on, you still feel the need to hide some of the tools you use “Undisclosed Tools $5,200.00” :)

    • Jamie Dolan

      I was curious about this also. I was wondering what the reasoning would be for keeping these tools “undisclosed”.

      • I would assume that they are negotiated prices. If the numbers would go out, other customers might ask the same pricing or might feel bad about it and leave.

        The goal of Buffer is to good with the disclosures, not bad. :)

    • Aldo Alfaro

      I think it was the provider who did not want Buffer to disclose pricing information.

    • LeoWid

      Great point Jurij, yes, Aido below said it very well. There were a few fantastic tools we’re using that asked us to not disclose their prices, so we didn’t want to cross the line with them, which felt like the right thing to do!

      Hope that is helpful! :)

  • Darren Slaughter

    That’s one hell of a thing to do. Really awesome that you guys do this. And I am going to show you that it has a direct effect on ROI as I am coming back to Buffer from Sprout…now if you guys could just work on that scheduling feature. ;)

    • Hey Darren! So delighted to have you back! What are you looking for in scheduling? Would love to make sure it’s on our list!

      • Darren Slaughter

        Hey Courtney, thanks! Being able to select multiple days at a time is the only reason we still used Sprout. Let’s say we have a piece of evergreen content we can promote once a month. With Sprout, you can select any day(s) you want while you have the post open.

  • Wow. I mean WOW. This is absolutely incredible post from the Buffer team. Thanks a lot for sharing this Leo. I love it.
    I was interested in reading more about the marketing expenses, but it seems like you’re pretty not proactive in this area, which is even more awesome :) Don’t you think that probably all this – transparency blogs, social media blogs, etc. is a part of marketing and should be part of the marketing expenses? Or maybe – who is involved in the marketing salary expenses? I’m just curious :) I’d like to bring this blog to our team to see how you work and how important it is to have it all so well calculated.
    Thanks a lot for such amazing post.

    • Hey Petr! Thanks; glad you liked the post! Great question regarding marketing costs. I guess in addition to the tools discussed in the post, the salaries of both me and Kevan are probably our main marketing expense since we’re the ones performing most of the marketing functions for Buffer (like writing most blog posts). :) Does that help?

      • Thanks a lot Courtney, I think also the BufferChats are a big part of the marketing activities and overall your Happiness Heroes are doing a great job which is connected to marketing activities too :) It is definitely hard to calculate all the exact expenses and sort them to the specific areas, but your post makes it clear enough, I was just curious how do you see it from your side. Thanks again for the wonderful post.

        • That’s an excellent point! We tend to think of those things separately when I agree there is a ton of “natural marketing” that comes from building a strong community and always trying to offer the best possible customer experience!

          • For sure Courtney. Because anywhere you read about Buffer, you always hear about excellent customer service. And the transparency. That for me is a big marketing aspect of the product, which however is not counted to the marketing “budget” :)

  • João Kramer

    I wish one day we could achive this level of transparency and organization in our company. Congratulations. You are very good.

  • Wow! That transparency…!

  • Tuan Anh

    I adore the way you conduct your business @ Buffer. Much respect. Regardless of the pricing breakdown, Buffer’ll be stronger, customers’ll love you more because of this. Not sure if other companies would do the same.

    • Thanks, Tuan! Getting to this level of transparency has been so enriching for us, and we hope that it helps everyone who interacts with us feel a bit more trust. :)

  • Jennifer Kesler

    You’re one of the few companies I’m proud to support. In this age of CEOs making 300-400 times what their lowest paid workers make (and I’m sorry, but no one can do anything that’s “worth” that), I love that everyone in your company is well-paid and must know what one another is making. You should be an example to other companies.

    • LeoWid

      thanks Jennifer!

  • Nicki Morris

    Awesome blog..thank you for sharing. I work with organizations to improve their workplace & leadership culture. Transparency is a value that is often discussed. I will use your example of awesome workplace culture and transparency as one of the examples I present! Thank you!

  • Interesting post. Am curious to see if this becomes more of a trend, especially by new-generation companies.

  • You guys set the bar high—thanks for sharing. We’re learning a lot from your model. One questions: what businesses inspire the Buffer team (and why)?

    • Oooh, this is such a great question! Lately a lot of us have been reading the book Reinventing Organizations by Frederic Laloux, and there are quite a few inspirational businesses profiled within!

  • Jamie Dolan

    This level of transparency is awesome. Thanks for sharing.

  • Andy Josuweit

    Are you purposely trying to achieve low profits to lower tax liability? 4.6% margins for a SaaS business is terrible. I am curious to hear your strategy on the timeline for profitability versus revenue growth versus R&D.

    • The high margins you hear of are operational/gross margins. For buffer it comes to about 90%.

      Net profit is another discussion.

      except i understand accounting wrong.

    • LeoWid

      great question @andyjosuweit:disqus and @ositanwoye:disqus answered this better than I ever could! :)

  • I see you use Xero, Freshbooks, and an accounting firm. What is the purpose of that? How do they all work together? Thanks!

    • LeoWid

      Hey Todd, great question! So, we use Freshbooks to invoice our customers if they prefer to pay via invoice. Our accounting firm that we work with use Xero to do some of their own invoicing and they also handle payroll, taxes and more for us! :)

      Hope that clarifies things, thanks again for stopping by!

      • Does Freshbooks offer something Xero doesn’t so you continue to use it even though your accounting firm prefers Xero, or did you just start using it first or something? Looking into some of these same issues right now.

        Really enjoying your blogs, starting following a few of them several months ago. Cool to put yourself out there on the journey—encouraging to other entrepreneurs.

  • amaboura

    Amazing Thanks! just saved me a ton of research.

    • LeoWid

      Awesome!

  • Matt Crystal

    Love the transparency Leo – 4.6% is really low for profitability. From what I understand, companies should be shooting for 10% to 15%, and 15% is STELLAR :)

    • LeoWid

      Hi Matt, great point! I think for the stage we’re at, we’re very happy with 4.6%, as we’re keen to reinvest most of every $ we make back into the business, largely through salaries as you can see.

      I do believe that being more profitable like you say further down the line could be useful!

      • Bart C

        1. I was thinking exactly the same as Matt. Now it looks like some companies make more money through Buffer then you guys do yourselves. Obviously profit is not a static figure, and maybe the short-term mission is growth, rather than increase your profit margin (which may automatically increase by growth).

        2. I was also amazed to see how much Stripe takes home. It almost seems worth the effort to allow ACH transfers (assuming most of your clients are American) which comes at 55 cents per transaction. Obviously this comes with a bunch of other hassles that you may not want to deal with right now which may distract you from your main goal (assuming that’s growth).

        3. On top of the normal Stripe rate, there are also currency conversion fees being charged. How much are you affected by that? In other words, how much of your clients are outside US?

  • David Dunworth

    Try getting large private firms from disclosing this information and you’d be barking at the moon. Or how about huge consulting firms, do you think they would show their entire hand?

    • LeoWid

      Great point David, hopefully we can inspire some others with this!

  • Love these posts. When I talk to anyone about startups, I almost always mention you guys because of the example they are setting. Thank you.

    • LeoWid

      Thanks so much for the kind mentions Joshua!

  • rkblogs

    This is great post, I love everything Buffer is doing as a team. Few things:

    1. Your table headers need to change as revenue instead of costs. Isn’t it “Monthly Revenue” in the table heading as you included profits in the table. Profit is not % of “cost” in the table. $10 is revenue to you and “cost” to me.

    Transparent “Pricing” Revenue and in this chart it makes sense that profit is a % or price.

    I know these are small details, but I couldn’t get past it while reading and hence an effort to comment.

    2. Great note about how you got the revenue numbers (probably you should have front loaded it) as I kept thinking about how this calculation will relate to number of users. The reason I say this is, as I am sure you know, part of your costs is fixed cost and wouldn’t necessarily increase with every addition of user.

    3. The fact that Stripe makes as much by handling just payment as your entire business’ profit, says something about how profitable payment as an industry is. Or am I missing something here ?

    4. However much I like you guys, as an individual I don’t have a need/want to buy premium options. Am very happy with free. But I am learning a lot from your content marketing posts. I feel guilty.

    Great post and lot of respect.

    • LeoWid

      That’s such a great point, you’re absolutely right, this crossed my mind too, and profit is definitely not a cost. Will see how we can improve this table in the future

      On 2., completely agreed, here it is if that’s helpful: https://open.bufferapp.com/buffer-public-revenue-dashboard/

      Re 3. I thought the same thing, and looking at their latest valuations they seem to be doing very well! Very glad they are, they are making our lives so much easier. :)

      4. That’s more than fine with us, so glad to have you, no matter which plan! :)

  • Once again, ground-breaking, innovative and disruptive levels of transparency from you guys. Great to see a values-led company in full force.

    • LeoWid

      Hey Christopher, thanks for the kind words! :)

  • @Leo, Buffer is a revolutionary organisation. I sincerely wish all success to you! :)

    • LeoWid

      thanks so much Manu!

  • Another wonderful post and initiative Leo.

    A few questions:

    * Completely understand why some supplies didn’t want your spend with them revealed – has this made you think if you can work with them in the future?

    * Would love a post covering some of the more obscure services you use – we see plenty on Sqwiggle and Olark, but would be interested in the ‘backoffice’ services you use and why.

    • Hey Luke! Thanks so much for your thoughtful questions here. What sort of back office services would it be helpful to know about?

      • Things like your send grid setup, how you act on new relic reports or even how zero helps the business.

        • Ah, got it! I’ll make sure I add that into our Trello board of future blog post ideas. It’ll be fun to share that! Thanks for the idea. :)

  • This is astonishingly generous. This post is so valuable for anyone starting a small business. So much better to have actual numbers instead of the generalisations passing for guidance which crop up in books and online advice.

    • Thanks so much, Tim! It feels great to know that this might help out some other businesses, too!

  • Leticia Supple

    Fascinating. That’s one thing missing: Taxation. Surely the tax costs are built into the model somewhere too?

    • Oh wow, such a great catch, Leticia! Let me check on how that fits into breakdown. Thanks so much for alerting us to that missing element!

      • LeoWid

        Great one Leticia! Our salary expenses and everything else have tax included already – might be a fun one to break out in the future sometime! :)

  • Lance Gilroy

    On a sorta related note, been considering a PFD like a JawBone. How do you guys like yours?

    • Hi Lance! Speaking for myself, I love the Jawbone! I found it very easy to get used to wearing and to use daily, and I definitely pay much more attention to my sleep and steps as a result. There are a lot of great app integrations, so you can really get into it! I think maybe some folks on our team have also used a Fitbit or other tracker, so maybe they can compare/contrast for you. :)

  • Interesting that you’re kinda doubling up on email tools with SendGrid and Mailchimp. I actually see this a lot. Makes me wonder if there is an opportunity for a consolidated email tool to rule them all, or if specialization still has it’s place and it’s advantages…

    • LeoWid

      Great question! For us, we largely use SendGrid for our transactional emails (welcome emails, trial expires, etc.) and we use MailChimp for our newsletter emails (more specialized).

      To us they serve 2 very different purposes, so I’m not 100% rolling them into one tool would make sense, it’d be interesting to see, I might be wrong here!

  • I’ve run a ton of Facebook ads and do that pretty much exclusively at work. Out of curiosity, how far off were you in reaching your goals? Was it strictly retargeting, keywords towards a specific niche, targeting people who work at specific tech companies?

    If you’re close to your goal, perhaps a few tweaks to image, copy, targeting, or other variables will do the trick and it will be scalable (maybe).

    • Hey Jonathan! Such great questions here. I don’t think we’ve totally given up on Facebook ads. I’d love to give them another try! One thing we’re working on right now is optimizing our funnel so that paid ads can work harder for us and convert better. I look forward to trying Facebook ads again when that step is completed. :) I’d love to keep you posted!

  • NickMinolich

    Why would you use so many ups when there are free or nearfree suites like Bitrix24 or Mango that cover project management, document sharing, group chat, videoconferencing, hr, virtual telephony and so on? Probably would cut your app costs by at least 30%

    • LeoWid

      Great question Nick! I think you’re right, there’re a ton of great, free tools out there.

      For us, most of the solution we found that work best for us are paid, love your suggestions there though and will be sure to check them out!

  • Sigh, if only my country’s government were like this :( , anyway great insight guys, thanks for sharing.

  • Tamas Kalman

    this is unbelievable, almost utopian level, unprecedented transparency; a bright light on the horizon of the mostly mediocre corporate world where most companies still stuck with 50s-80s style hierarchical management, close supervision and in information silos. congratulations for this achievement and for the absolutely brilliant way as your organization works.

    • Thanks for your very kind words, Tamas! Very glad you enjoyed reading the story behind our prices. :)

  • Just when I thought you all couldn’t be ANY more transparent, you bust out with this information. Wow – love it! It’s fascinating to see where all of your money goes.

    Buffer for President! :)

    • Hahaha thanks Thea! Feels great to know this one struck a chord for you!

  • This is amazing how much transparency you guys have. Really respect that! So interesting reading all these posts.

  • This is awesome. Thanks for sharing. It just reassures that this is an incredibly good investment, an amazing service at a phenomenal price.

    • Hey Jamie! Glad to hear that this was helpful for you, thanks for checking it out!

  • Guest

    You can show this split up better using tools like OpenReporting.com

  • Do you know you can show your expense data using OpenReporting.com?

  • seanvanstaden

    Great Article Leo. It allows people to see the inner workings of a machine. Could you perhaps tell me how your equity split is…
    Do your employee get shares?

    It would be good to know since I believe this is an integral part of worker and partner loyalty

    • Hey there! Totally agree, and great question. Just hopping in for Leo to share this post, in which we break down all our individual shares: https://open.bufferapp.com/buffer-open-equity-formula/ Does that help at all?

      • seanvanstaden

        Thank you Courtney.
        By being so transparent… weird but true, I feel more attached to your brand and philosophy.

  • Dan

    Hi. Great stuff! May I ask why use sendgrid AND mailchimp? Would love to learn. tnx!

    • LeoWid

      Hey Dan, Great question! For us, we largely use SendGrid for our transactional emails (welcome emails, trial expires, etc.) and we use MailChimp for our newsletter emails (new blogposts). Hope that helps!

  • Peter van Sabben

    Truly amazing! Well done! Your culture, became your brand, which is a great achievement!

  • Great post! Keep bringing the transparency. Every time you do it’s like a mini lesson in how to run a startup.

    Quick question; how does Buffer use Zapier? Do you use it connect your Wufoo forms to something? Or, something else entirely?

    Cheers,
    Josh @ Blitzen

    • Hey Josh! Thanks for the love! We use Zapier in a few ways, many of which involve Hipchat. :) We connect blog comments here and on the Buffer Social blog into Hipchat through Zapier so we’re able to learn about and answer them more quickly. We connect our customer happiness tools like Hipchat and Sparkcentral to Hipchat so we can all hop in when needed. And yup, we connect it to Wufoo forms for things like our Kindle book forms. You can read a bit more about some of our uses here: https://open.bufferapp.com/remote-working-means-tools-use/ :)

  • Ulrik

    Best post ever!

    Few questions:
    1) wow, $7000 for an office used by 2-6 people, you should really go to a coworking space!
    2) $113500 for a single retreat shocked me, ok that NY is expensive, but it’s a lot. Do you have any budget for each retreat? And do you still see them feasible when you’ll be 50, 100 or even 200 people?
    3) how do you hire people outside the US that don’t have a visa and work from their homes? Do you pay them as freelancers?
    4) how do you manage kindle ebooks? Is it automatic or manual when someone wants to buy a book?
    5) I’ll expect to read a more teach nerdy post, how much bandwidth/storage/request do you have on S3? Which instances do you use and for what? How is structured your infrastructure?

    I have many more questions, but for now I’ll stop here =)

    • LeoWid

      Hey Ulrik, thanks so much for stopping by here!

      1 – ha, you’re reading my mind! We’ve been discussing this the other day and it looks like we might just do that and get a few desks at a co-working space That’d make so much more sense – completely agreed!

      2. Yup, on retreats we’re quite keen to spend money, so we truly make this a great bonding experience. Definitely one of our larger expenses!

      3. You’re exactly right, we’re paying people as contractors who live outside the US

      4. We have a wufoo form where people can submit their ideas, it’s super easy and we then gift it to them via email .

      5. Great one – for the more technical side, I think you’ll find this helpful: https://overflow.bufferapp.com/

      Thanks again for the thoughtful questions and ideas! We’ll keep you posted on what we find in the future! :)

      • @disqus_JkCCamuZG1:disqus @LeoWid:disqus another idea – instead of moving to a co-working space, would you consider renting space in your office to [an]other like-minded startup[s]? I’m sure if you put it out there that you’re looking for “roomies” – you’ll get a lot of requests to cover the entire cost of your rent. You all have a lot of fans. :)

  • This is phenomenal. I have never seen such transparency. Even when you get a prospectus/annual report from a publicly traded company – you don’t get to see such transparency.
    BTW I started using Bufferapp this weekend, and I am thrilled I have made the investment ($10 monthly plan) – great product.

    Admirable company..

    • Oh wow, we’re so happy to have you with us at Buffer, Nissar! Thanks so much for your kind words, and do let me know if I can help you make the most of your account in any way at all!

  • This is great transparency, but I think your profits are too low. 4.6% margin is like what a grocery store or utility company makes. You should either charge more or come up with higher end products. Tech company profit margins should be 20 – 30%.

    • Thanks, Alex! Great point; definitely something for us to consider.

  • Ke_Ga

    Joel, thanks for sharing and congrats on such amazing growth. Part of the ManageFlitter team is distributed. Interested in your thoughts, experiences, tools etc you use to manage the distributed team

  • Rapid Fire

    Your product is great, this company is amazing. When I grow up I want to be @Buffer !

  • Jean Neftin

    @Leo, you probably already saw this article

    http://hbswk.hbs.edu/item/7644.html

    • LeoWid

      wow, I hadn’t seen this, that’s amazing, thanks for sharing Jean!

  • Jonathan Henley

    Honesty never hurt anyone, and you guys frankly are proving to be better than many in soooo many ways!

    There really should be more businesses like Buffer who actually understand that ‘doing’ transparency is far more important than simply ‘talking’ transparency.

    Buffer are a leader in their field, and now they are leading the way in one aspect of business management that so, so many organisations seem to find difficult to swallow.

    Keep up the good work!

    • Thanks so much for the comment, Jonathan!

  • Itamar O

    Yet again, another inspiringly transparent post! Keep it up! :-)

    I find it interesting to consider your total monthly profit w.r.t. total monthly salary costs. At $15,666, the profit is about 7% of all salaries. This means that if you hire two new employees (or one senior), your entire profit is wiped.
    I am not too familiar with the financial aspects of startups, but is it reasonable? It looks risky to me.

  • Dearest Buffer team, what an incredible step forward in paving the path for others to practice transparency!

    Question: what method or tool do you use to make all financials accessible or at least visible to the entire team (presumably to help inform their individual decision making)? I saw a guest in the comments mention openreporting.com and I’ll have to check that out as well.

  • Celso Fernandes

    Leo,

    First, I can’t start without congratulate the text writing.

    Buffer will probably scale the revenue scaling the software, but costs will probably not grow in the same ratio. How would you deal with this situation? Hire more people to keep the cost structure or assume a bigger profit?

    Regards

  • you guys are crazy – the first company ive ever seen put it all out there when it comes to finances

    • Jonathan Henley

      I would say, Codie, NOT crazy, but honest, decent, true and most of all groundbreaking.
      I’ve had the financial wool pulled over my eyes before by partners in business, and it wasn’t nice. If only there were more guys like these. (And if only they wanted to start in London

  • Leandro Thomas

    Truly remarkable what you guys are doing here. I hope that you remain this way, as your company grows. Support all you stand for here. Oh and as a recently new Buffer user I have to say: It rocks!

  • Stacey Valley

    Thank you for your transparency. It’s so refreshing.
    P.S. I love Everlane’s t-shirts!

    • Thanks so much, Stacey!

  • Teresa wolf

    I have worked in an office setting for many years, and it’s not often that one sees this much of the company’s Financials. I am very impressed with the details you put into this. I am also very intrigued with your work model. After browsing over your site a few times I am very interested in applying for a job. It sounds like you have a great team of people. That can be hard to find. Keep up the great work, and maybe I will be in touch soon regarding a possible application.

  • I’ve discovered Buffer a few days back and the more I read about you guys the more I think “where has this company been all my life?”. I fully identify with your transparency and find it courageous how exposed you become by sharing this data. I’m sure you have quite a few trolls, but this breakdown on top of super informative is most of all trust building.
    I wonder if you thought about a payment model in which you have the breakdown as the graphic and then a little open box where people decide what they want to pay you on top of your costs. You could make this box has a minimum, in this case of $0.50 and see how generous people can be when they know what’s behind the scenes.

  • Shaun Carter

    Very awesome philosophy!

    You may want to take a look at an error in your salary spreadsheet though. Within the “Engineers” tab, the “Salary” formulas in column P are pulling “Choice” (Column N) values from one cell below where they should be.

  • Hey Leo, thank you so much for this post. Julia (from your team) shared it last night as she followed up on a Twitter discussion I was having on Saas pricing. This has helped in many ways: both seeing your costs relative to how you price but more so, seeing some of the decisions you guys have made is helping with some of the thinking I am currently having. You very often feel lonely – as a founder, when decision making is up to you and often on things you don’t get to discuss – such transparency is like an invite into ones home. So thank you and best of luck with everything! Andreea

  • Taciano Messias Moraes

    Holy cow, you guys are light-years from the commonly seen in rest of the world! May this page serve as inspiration for more companies and governments to join the transparency movement!

  • John D

    $0.46 left from $10. Pretty crap. Too much mollycoddling in this industry. Retreats/health insurance & culture -pff, get rid. Also, the employees – way too overpaid. With the bottom line being what it is, they aren’t delivering the value that justifies those exorbitant salaries.

  • Lê Hải Nguyên

    Amazing and inspiring! I wonder if you have any recent update for this?
    Greeting from Vietnam!