Revenue per FTE reveals how much each employee contributes to your top line. It’s a simple metric with powerful insights, helping businesses spot productivity gaps, optimize staffing, and benchmark their performance against peers.
Benchmarking your Revenue per FTE? Start your search
Whether you’re in HR, finance, or leadership, mastering this metric gives you a clear view of how your workforce drives revenue. In this blog, we break down what revenue per FTE really means, how to calculate it, and how to use it to make better decisions.
Revenue per full-time equivalent (FTE), is a key metric for measuring workforce productivity. It calculates how much revenue each FTE generates and helps businesses evaluate efficiency and resource allocation. Understanding this number gives leaders insights into operational performance, team productivity, and potential areas for improvement.
Revenue per FTE matters because it is more than a raw number. It is a benchmark that helps leadership to answer key strategic questions, such as:
Without tracking this metric, companies risk making decisions based on incomplete information.
Calculating revenue per FTE is straightforward, but requires clarity on what is included in each part of the equation. We typically follow these rules:
To calculate the metric, start with your total revenue over a set period, then divide it by the average number of FTEs in the same period (note: the “period” is typically one year).
For example, if a company earns $5 million in revenue and employs 50 FTEs, revenue per FTE would be calculated as:
$5,000,000 / 50 = $100,000 revenue per FTE
This metric can be tracked quarterly or annually depending on your business cycle and reporting needs. Accuracy in counting FTEs is critical to avoid misleading results.
Unfortunately, there is no universal benchmark because it varies by industry, business model, and company size. Let’s look at why:
There are many different industries, which have material differences between them. In the simplest form, some industries like manufacturing sell a product, while other industries like marketing agencies sell a service. These differences have a major impact on the average revenue per FTE.
Similar to industry differences, there are many different types of business models out there. For example, subscription-based models or long-cycle sales can distort revenue per FTE if not considered in context.
The size of a business can have a major impact on revenue per FTE. For example, smaller businesses don’t have economies of scale benefits that larger enterprises receive. This factor alone can drive significant differences between businesses even in the same industry.
Comparing your revenue per FTE against peers with the same factors is more meaningful than looking at general averages.
Ready to benchmark your Revenue per FTE? Search now
Revenue per FTE has practical applications across management, HR, and finance. For example, many companies rely on it for:
By using revenue per FTE in decision-making, organizations can align their talent strategy with business goals, ensuring investments in employees translate to measurable returns.
Increasing revenue per FTE is often more about strategic adjustments rather than cutting staff. Effective approaches often include:
Organizations that focus on these levers tend to see sustainable improvements rather than temporary spikes in productivity.
Revenue per FTE puts a spotlight on workforce efficiency. It doesn’t tell the whole story on its own, but paired with the right context and complementary metrics, it can transform how you plan, hire, and operate.
It varies widely by sector. Technology and finance typically have higher revenue per FTE than education or healthcare. Look at industry reports or benchmarking studies to understand what’s typical for your field, then consider your company’s size and business model for context.
Compare your revenue per FTE to published industry averages or peer companies. Adjust for factors like company size, region, and business model. Direct comparisons without context can be misleading, so focus on trends and relative efficiency rather than absolute numbers.
Contractors can be included proportionally if they work consistently and contribute to revenue generation, but they’re usually weighted based on hours worked compared to a full-time employee. Transparency in your methodology ensures meaningful comparisons over time.
Focus on efficiency rather than pushing for longer hours. Streamline processes, invest in automation, clarify roles, and ensure employees are in positions that match their skills. Improving productivity sustainably is better than simply expecting more output from the same workload.
It can, indirectly. Flexible work arrangements may improve engagement and focus, which can boost productivity, but they may also require new management practices or technology to maintain efficiency. Measure results carefully and focus on output rather than just hours or location.
Improve your business - Search FTE benchmarks today
.svg)
Download a copy of our latest all industry report with data to benchmark the Finance, HR, IT and Marketing functions.
Insights are just around the corner.
.svg)
.svg)
