How to use the revenue per employee calculator
- Enter your revenue for the year and the number of employees. For part time staff, use a decimal such as 12.5 so that the headcount reflects full time equivalents.
- Optionally enter the payroll cost to see payroll as a share of revenue and the revenue per payroll dollar, and the profit to see profit per employee.
- Open Advanced options to enter last year's revenue and headcount. Both are needed together to show the change.
- Read the revenue per employee, then the monthly and weekly equivalents and any of the optional ratios. Use Copy or Print to keep the result.
Formula
Revenue per employee = revenue / employees
Payroll share of revenue = payroll cost / revenue
Revenue per payroll dollar = revenue / payroll cost
Profit per employee = profit / employees
Change from last year = (this year per employee - last year per employee) / last year per employee
Use a headcount that matches the period, such as the average over the year. A year-end headcount in a growing business overstates what each person accounted for.
$2,000,000 and 20 employees
A company earned $2,000,000 in revenue with 20 employees. Revenue per employee is 2,000,000 / 20 = $100,000, or $8,333.33 a month.
Add a payroll cost of $900,000 and a loss of $100,000. Payroll is $45,000 per employee and 45% of revenue, each payroll dollar supports $2.22 of revenue, and profit per employee is a loss of $5,000, shown as ($5,000.00). If last year was $1,500,000 with 15 employees, that is also $100,000 per employee, so the change is 0%: the company grew its headcount and revenue in step.
What the ratio can and cannot say
Revenue per employee is a quick measure of how much revenue a business produces for each person on the payroll. A higher figure can mean strong sales, efficient operations or heavy use of equipment and outside services. A lower figure can mean a labor intensive business model or a team that has grown ahead of sales.
It does not say whether the business is profitable, and it cannot be compared across very different kinds of business. A software company, a restaurant and a consultancy have very different structures, so compare with your own past years or businesses like yours.
Getting the headcount right
Count employees the same way every time. Using the average headcount for the year is better than the figure on the last day, and a decimal can reflect part time staff or people who joined partway through. The FTE calculator converts between headcount and full time equivalents.
Contractors are not employees, so decide whether to count them and stay consistent. For the full cost of a person on the payroll, see the employee cost calculator, for the margin behind the revenue use the profit margin calculator, and for staff changes try the employee turnover calculator.
Assumptions and limits
- Revenue, payroll, profit and headcount are figures you enter for the same period.
- Negative profit is shown in parentheses as a loss.
- Percentages are based on the numbers entered and are not compared against any benchmark.
- The starting numbers are examples and not figures for any real company.
Frequently asked questions
How do you calculate revenue per employee?
Divide total revenue for the period by the number of employees. Use the same period for both numbers.
Which headcount should I use?
The average over the period is best. If you only have the end of period number, note that it can overstate revenue per employee for a business that is growing.
Is a higher revenue per employee better?
Often it indicates efficiency, but it depends on the kind of business. Compare with your own history and with similar businesses instead of a single target.
Can I count part time workers?
Yes. Enter a decimal headcount that reflects their share of a full time role, for example 12.5 for twelve full time workers and one half-time worker.