Revenue Per Employee Calculator

The productivity benchmark that tells you whether you're underpriced or overstaffed.

Your numbers

Annual revenue$Full-time employees (including owner)Part-time employees (count as 0.5 each)Gross margin (%)%Total burdened labor cost$Target revenue per employee$

Your result

Effective headcount: 10
Revenue per employee: $150,000
Gross profit per employee: $60,000
Labor efficiency ratioGross profit ÷ total labor cost. Below 2.0 is a warning sign for most service businesses.: 0.94
Revenue if you hit $180K per employee: $1,800,000
Revenue gap to target: $300,000
Headcount this revenue should supportAt your target revenue per employee.: 8.33

$150,000 of revenue per employee

Slightly below target. Look at billable-hour ratios and average ticket before you look at headcount — pricing usually explains more of this gap than staffing.

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What this number actually tells you

Revenue per employee is the fastest way to sanity-check productivity. Two businesses with identical revenue and wildly different headcount are not the same business — one is efficient and one is carrying cost it hasn't noticed.

It also cuts through the usual argument about whether you're underpriced or overstaffed, because both show up here. If revenue per employee is low, either your prices are too low for the labor you consume, or you're consuming more labor than the work requires.

The companion number is the labor efficiency ratio: gross profit divided by total labor cost. Below 2.0, labor is eating the business. Above 3.0 usually means strong pricing and good process.

How the math works

01Effective headcount = full-time employees + (part-time × 0.5), including the owner.
02Revenue per employee = annual revenue ÷ effective headcount.
03Gross profit per employee = revenue per employee × gross margin %.
04Labor efficiency ratio = gross profit ÷ total burdened labor cost.
05Headcount the revenue supports = revenue ÷ target revenue per employee.

What to do with the answer

Compare your number year over year, not against another industry. The trend tells you more than the absolute figure.
If revenue per employee drops after a growth year, you added people faster than you added productive work.
Use the labor efficiency ratio for hiring decisions: if it's under 2.0, fix pricing and productivity before adding headcount.
Include yourself in the count. Leaving the owner out inflates the number and hides owner dependency.

Want someone to read these numbers with you?

The Growth Assessment is a 30-minute conversation about what your numbers are telling you and what to fix first. No pitch deck, no PDF.

Schedule Your Growth Assessment Or call (737) 888-0415

Questions owners ask about this

What is a good revenue per employee for a small business?

For established service and trade businesses, $150,000–$250,000 per full-time employee is a healthy band. Equipment-heavy and distribution businesses run higher; labor-intensive services run lower. Under $100,000 usually signals underpricing or unproductive hours.

What is the labor efficiency ratio?

Gross profit divided by total burdened labor cost. It tells you how many dollars of gross profit each labor dollar produces. Under 2.0 means labor is consuming too much of the value created; 2.5–3.5 is healthy for most service businesses.

Should I count subcontractors as employees?

Count them if they're doing work employees would otherwise do, because they consume the same capacity and produce the same revenue. Leaving them out makes productivity look better than it is.

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