← Back to Tools

Revenue Per Employee Calculator

A $2M company with 20 employees is less efficient than a $1M company with 4.

Revenue per employee is one of the simplest and most revealing metrics for any small business. It strips away vanity numbers and tells you whether your team is actually generating enough output to sustain profitable operations.

Enter Your Numbers

Your total revenue for the last 12 months. Use gross revenue before any deductions.

Include yourself as the owner. Count part-time workers as fractional (e.g., two half-time = 1 FTE).

Select the closest match. This determines the benchmark comparison for your results.

What Revenue Per Employee Actually Tells You

Revenue per employee is a productivity metric. It answers a simple question: for every person on your payroll, how much revenue does the business produce? It strips away the complexity of financial statements and gives you a single number that reflects operational efficiency.

A business doing $2,000,000 with 20 employees generates $100,000 per person. A business doing $1,000,000 with 4 employees generates $250,000 per person. The second business is almost certainly more profitable, even though it's half the size. That's the insight this metric provides.

Why It Varies Dramatically by Industry

Not all industries are created equal when it comes to revenue per employee. A technology company can often generate $300,000or more per employee because software scales without proportional labor. A restaurant, on the other hand, may only generate $60,000per employee because the service is inherently labor-intensive.

This is why industry benchmarks matter. According to data from the U.S. Bureau of Labor Statistics and Census Bureau Annual Business Survey, typical ranges include:

  • Professional Services: $150,000 – $250,000. Consulting, accounting, and legal firms have high billing rates relative to headcount.
  • Construction: $200,000 – $350,000. Heavily project-based, with large contract values per crew member.
  • Retail: $150,000 – $200,000. Depends heavily on volume and product margins.
  • Restaurant/Food Service: $55,000 – $75,000. Labor-intensive with thin margins. This is the toughest industry for this metric.
  • Technology/SaaS: $200,000 – $400,000. Software scales efficiently once built.
  • Manufacturing: $200,000 – $300,000. Equipment leverage helps, but labor remains significant.
  • Healthcare: $100,000 – $200,000. Highly regulated with mandatory staffing ratios that limit efficiency gains.

How to Improve Revenue Per Employee

There are only three levers: increase revenue without adding people, reduce headcount without losing revenue, or do both. Here are the most practical approaches:

  1. Raise prices. This is the fastest way to increase revenue per employee. Most small business owners underprice their services. A 10% price increase with zero customer loss goes straight to the top line.
  2. Automate repetitive work. If an employee spends 20 hours per week on tasks a $200/month software tool could handle, that's a massive efficiency gain. Look at invoicing, scheduling, data entry, and reporting first.
  3. Eliminate roles that don't produce or support revenue. Every position should either directly generate revenue or clearly enable someone else to generate more. If you cannot trace a role back to revenue, question whether it's necessary.
  4. Cross-train your team. Specialists create bottlenecks. When one person is the only one who can do a task, you end up with idle capacity elsewhere. Cross-training lets you run leaner.
  5. Focus on high-value work. Not all revenue is equal. If your team spends 40% of their time on low-margin jobs, redirect that capacity toward higher-margin work.

Company Size Matters

Small businesses (under 20 employees) often have a distorted revenue per employee figure because the owner wears many hats. The owner might be the salesperson, project manager, and bookkeeper. As you grow, those roles get split across multiple hires, which can temporarily lower your revenue per employee.

This is normal. The key is to watch the trend. If you added three employees last year and revenue per employee dropped, those hires haven't paid for themselves yet. Give it 6-12 months, then reassess. If it still hasn't recovered, you may have hired ahead of demand.

According to the SBA, businesses with 5-19 employees often see this metric dip as they transition from owner-operated to team-operated. The most successful companies push through this phase quickly by building systems that let new hires become productive faster.

The Danger of Chasing This Metric Alone

Revenue per employee is powerful, but it is not the whole picture. A business generating $500,000 per employee on 5% margins is less healthy than one generating $200,000 per employee on 25% margins. Always pair this metric with profit margin analysis to get the complete view.

Similarly, cutting headcount to boost this number can backfire if it leads to burnout, quality problems, or missed growth opportunities. The goal is not to minimize employees—it's to maximize the value each person creates.

Sources

Related Tools

Employee Cost Calculator

What does an employee actually cost beyond their salary?

Overhead Rate Calculator

Calculate the true cost of keeping the lights on per dollar of revenue.

Profit Margin Calculator

Are you actually making money, or just moving it around?