What Is Revenue Per Employee?
Total annual revenue divided by the number of full-time employees, measuring operational efficiency and how effectively a company uses its workforce.
Revenue Per Employee Explained
Revenue per employee is one of the simplest and most revealing efficiency metrics. It measures how much revenue each employee generates on average. Higher is better, as it indicates the company generates more output per unit of labor cost.
The metric varies dramatically by industry. Technology companies often exceed $500K per employee. Professional services firms typically range from $150K to $300K. Retail and hospitality businesses may be under $100K. Comparing within your industry is more meaningful than absolute numbers.
Revenue per employee improves through three mechanisms: growing revenue without proportional headcount increases (scaling), automating tasks that previously required people (AI automation), and improving employee productivity through better tools and processes.
For PE firms evaluating acquisitions, this metric indicates operational efficiency and automation potential. A company with $120K revenue per employee has more room for improvement than one at $250K. That improvement potential translates directly to EBITDA expansion.
Why Revenue Per Employee Matters
Revenue per employee reveals whether a business is scaling efficiently or just adding headcount proportionally. Companies that increase this metric through AI automation and process improvement grow margins without growing payroll.
How to Calculate Revenue Per Employee
Revenue Per Employee = Total Annual Revenue / Number of Full-Time EmployeesRelated Terms
AI Automation
Using artificial intelligence to handle repetitive business tasks automatically, reducing costs by 30-40% while improving response times.
Process Optimization
Analyzing and improving business processes to increase efficiency, reduce costs, and eliminate waste, often combined with AI automation.
EBITDA Add-Back
Expenses added back to earnings before interest, taxes, depreciation, and amortization to reflect the true recurring profitability of a business.
Technician Utilization Rate
The percentage of a technician's available work hours spent on billable, revenue-generating tasks versus non-billable time like travel or admin.
How Attainment Helps
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Frequently Asked Questions
What is a good revenue per employee?
It depends on industry. SaaS: $200K-$500K+. Professional services: $150K-$300K. Healthcare services: $100K-$250K. Home services: $80K-$200K. Compare against your industry peers rather than cross-industry benchmarks.
How do you improve revenue per employee?
Three approaches: grow revenue faster than headcount (sales efficiency, pricing), automate tasks with AI (reduce labor needs), and improve productivity (better tools, training, processes). AI automation typically delivers the fastest improvement.
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