Revenue Per Employee Calculator

What this revenue per employee calculator does

Divide your revenue by your headcount and you get a number that tells you how much business each person in the company is attached to. It is the crudest productivity measure there is, and it is quoted constantly, particularly by people comparing their company against a benchmark they found somewhere.

Give this calculator total revenue and number of employees and it returns revenue per employee.

The arithmetic is one division. Everything interesting about this ratio is in the two inputs, and particularly the second one, because who you count as an employee moves the answer more than almost anything the business actually does.

Everything runs in your browser. Nothing typed here is stored or sent anywhere.

How to use it

1. Revenue. Total revenue for the period, usually a full year. Annual is the convention, and comparing a quarterly figure against an annual benchmark is a mistake people make more often than you would expect.
2. Number of Employees. Headcount. Read the section below before deciding what goes in here, because there is no single correct answer and the choice matters.

Press Calculate. Press Reset to clear it.

The output is labelled with a dollar sign but the arithmetic is currency blind, so read it in whatever your revenue is denominated in.

Where headcount moved during the year, use the average rather than the closing figure. A company that doubled its staff in December will otherwise show a badly understated number, because the revenue was earned by the smaller team.

The formula

Revenue per employee = total revenue ÷ number of employees

What it is measuring, roughly, is how much of the work of generating revenue is done by people rather than by capital, systems or someone else's people.

Which is why it is not really a productivity measure in the way the name suggests. A business with a high figure may have brilliant staff, or it may have automated heavily, or it may have outsourced most of the labour to companies whose employees do not appear in the count. All three look identical here.

It is a genuinely useful number when compared against the right things and a misleading one when compared against the wrong ones. The rest of this page is about telling those apart.

A worked example

A company with 50,000,000 of annual revenue and 200 employees.

50,000,000 ÷ 200 = 250,000 per employee.

Two more, to show the spread across ordinary businesses:

Now the obvious question is which of those is good. And the honest answer is that you cannot tell from these numbers alone, for the reason in the next section.

Who counts as an employee changes the answer by two thirds

This is the problem with the ratio and it is rarely acknowledged.

Take our company with 50,000,000 of revenue. Depending on where you draw the line around "employee", here is what it reports:

Same company, same year, same revenue. The figure ranges from 166,667 to 277,778, a spread of about 1.67 times, decided entirely by a definitional choice nobody standardised.

And notice which direction the incentive runs. A company wanting to look efficient counts only permanent full-time staff and quietly leaves out the contractors doing a third of the work. That is not fraud, it is a defensible choice, and it makes the published figure meaningless for comparison unless you know what everyone else counted.

The most defensible basis is full-time equivalents, where two half-time people count as one, including anyone whose labour is genuinely part of producing the revenue. Whatever you pick, the rule is the same as with every ratio in this family: use one definition, know which one, and never change it partway through a comparison.

If you are comparing against a competitor, the only reliable approach is to take their headcount from the same place for both of you, usually the annual report, and accept that even then the two companies may have drawn the line differently.

The number is mostly telling you what industry you are in

Revenue per employee varies more across industries than almost any other ratio, and the variation has very little to do with how hard anyone is working.

Three things drive it.

How much of the value comes from capital rather than people. A refinery, a telecom network or a shipping line generates enormous revenue from enormous assets operated by relatively few staff. A consultancy generates revenue almost entirely from hours worked. The first will show a figure many times the second, and neither is a comment on the quality of the workforce.

Whether the business resells or creates. A distributor books the full value of goods it passes through, so its revenue is large relative to its headcount by construction. A business that makes something from raw materials books only what it adds. This is why comparing a wholesaler against a manufacturer on this ratio is meaningless, and why some analysts prefer gross profit per employee, which strips out resold value and is far more comparable.

How much is outsourced. Two identical businesses, one employing its own logistics and support staff and one buying those services in, will report very different figures. The second looks more productive and is not.

So the useful comparisons are narrow. Against your own history. Against direct competitors in the same business model. Against other teams or locations inside your own company, where the definitions are at least consistent. Anything wider than that is entertainment.

Where it is genuinely useful

Despite everything above, the ratio earns its place in a few specific jobs.

Tracking your own trend. This is the best use by a distance. If revenue per employee is rising, the business is growing faster than its headcount, which usually means the model is scaling. If it is falling while you hire, you are adding people faster than they are adding revenue, and that is worth knowing early rather than at the point where it shows up in the profit line.

Sanity checking a hiring plan. Take your current figure, multiply by the headcount you are planning, and ask whether that revenue is realistic. A company at 250,000 per head planning to double from 200 to 400 people is implicitly forecasting 100,000,000 of revenue. Sometimes that is exactly the plan. Sometimes seeing it written down changes the conversation.

Comparing units inside one company. Two regional offices, two sales teams, two product lines. The definitional problems mostly vanish because the same rules apply on both sides.

As a rough alarm on headcount creep. Steady decline over several years, without a deliberate strategy behind it, is a reliable early signal of an organisation getting heavier.

Two things it will not do. It will not tell you whether the business is profitable, because revenue is not profit and a company can have a marvellous figure here while losing money on every sale. And it will not tell you anything about the assets employed, which is what asset turnover and return on capital employed are for. Read it alongside those rather than instead of them.

Questions people ask

How do I calculate revenue per employee?

Divide annual revenue by headcount. 50,000,000 across 200 people gives 250,000 each.

What is a good revenue per employee figure?

There is no universal number. It varies enormously by industry and by how much a business outsources. Compare against your own history and against direct competitors, not against a figure from another sector.

Should I include contractors?

If they are doing work that produces the revenue, including them is more honest. Excluding them flatters the figure. The important thing is to be consistent and to know what any benchmark you are comparing against did.

How do I handle part-time staff?

Convert to full-time equivalents. Two people at half time count as one. That is the most defensible basis and the one most published figures use.

Headcount changed during the year. Which figure?

The average, not the closing number. Otherwise a late hiring push understates the productivity of the team that actually earned the revenue.

Is there a better version of this ratio?

Gross profit per employee is more comparable across business models, because it strips out the value of goods a company merely resells. Worth calculating alongside if you are comparing a distributor against a manufacturer.

Does a high figure mean the company is profitable?

No. It measures revenue, not profit. A business can carry a high revenue per employee and lose money on every transaction.

References

A note on sourcing. Revenue per employee is a management ratio rather than a standardised accounting measure, and there is no authoritative definition of headcount for the purpose, which is the source of most of the comparability problems described above. The revenue figure itself is governed by the recognition standards below. Industry data on revenues, margins and returns, useful for putting any productivity figure in context, is compiled by Aswath Damodaran at NYU Stern and updated each January.

1. International Accounting Standards Board, IFRS 15, Revenue from Contracts with Customers. https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/
2. Damodaran, A., Useful Data Sets, NYU Stern School of Business. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html
3. Damodaran, A., Margins and ROIC by Sector, United States, NYU Stern School of Business. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/mgnroc.html