That works out to be about $10.5K (9.7K EUR) per month, pre-tax. I'm not sure where you're from/at geographically in the world, but in most places where I have lived that would be considered a large salary for just software development.
Outside of the major cities in the US, wouldn't that also count as a fairly large salary?
$1M ARR is not very much when you have almost 10 employees. This would be considered rather modest. Generally the rule of thumb for me has been that each €100k ARR is an absolute minimum to hire an additional employee, thus €1M ARR would be an absolute maximum of 10 employees.
You're talking from the perspective of the company, I was specifically replying to the "this is still only $125k each -- that's hardly big money" part, which I thought was very clear since that's the part I quoted.
Besides, parent already went through those, their back of the napkin guessestimate is after other expanses. Click the "parent" link next to the timestamp if you're having troubles finding it.