[username90]

> Simply: does revenue exceed cost of running it?

Cost of running it includes engineering salaries, so isn't a good measure to include when you measure productivity of engineers. A productive engineer would be worth a higher salary, but if you include the cost of that higher salary reducing his value would that also reduce the salary you want to pay? Doesn't make sense.

[dmos62]

Also, what if engineering is good, but sales is bad? Engineers might exceed their productivity goals, but it wouldn't amount to profit.

[andrey_utkin]

Then from the internal market economics PoV, here's how it looks:

Engineering: costs (salaries + infra) are covered by revenue (services rendered to exec team). Executive team: costs (execs salaries, expenses to pay engineers and sales for their services, accumulating interest to be returned to investors if any) are NOT covered by revenue (which comes from customers).

I find this decomposition incredibly neat and enabling solving the right problems.

[andrey_utkin]

> but if you include the cost of that higher salary reducing his value would that also reduce the salary you want to pay? Doesn't make sense.

It indeed doesn't. Where did you get that idea? It's not as complicated as you probably think.

If the engineer has rendered services which are worth his salary + his actual expenses to achieve that, he has earned exactly his salary, high or low.