Revenue Per Employee (RPE)

by Sarah Wisbey Freelance Writer, passionate about Growth and Learning by Doing

Table of Contents

What is Revenue Per Employee (RPE)? 

Revenue per employee is the estimated number of how much each employee brings into your company. It’s a way to calculate how much profit each employee generates. Calculating your revenue per employee ratio can help you determine how productive your workforce is and how efficiently your company is running. 

How do you calculate Revenue Per Employee?

To calculate your revenue per employee, there’s a simple formula. You divide the company’s total income by the average number of employees: 

Total revenue / Total average number of employees 

You can make this calculation annually or quarterly, depending on how fast you’re growing and how often you’re recruiting new hires. If you’re regularly hiring new team members, you may want to calculate your RPE quarterly to give you a more accurate overview of your team’s productivity. 

Using the average number of employees for the calculation helps to account for fluctuations in the staff numbers. 

To find the average, use this formula :

No. employees at the start of the period  + No. employees at the end of the period / 2

Which factors affect RPE? 

These factors all affect your RPE number: 

  • Size of your company 
  • Age of your company 
  • Industry 
  • Employee turnover 

Why is Revenue Per Employee a useful metric? 

Keeping a record of RPE can help you understand where your growth comes from and how new hires impact your bottom line. A larger workforce doesn’t necessarily mean a more efficient one, so tracking RPE can help you cut costs on unnecessary hires.

When you measure your RPE, you can compare it with your hiring, training, and retaining costs, which gives you insight into employees’ lifetime value. The metric can help inform your staffing strategy and budget for future hiring. 

You can also use your RPE figure to compare yourself with similar businesses in your niche that are at a similar stage in their growth. Benchmarking your RPE against the average in your industry will help you determine whether you have high productivity and identify areas for improvement. 

Knowing your RPE can also help you calculate your company’s revenue potential and can be a helpful figure to share with potential investors. 

What’s the average RPE for SaaS companies? 

A high revenue-per-employee ratio usually indicates efficiency and a high level of productivity. It suggests that the company invests in training and development to build a highly skilled and productive team.

The average RPE for a SaaS company depends on your industry, the size of your business, and the stage you are at in your growth. Check out this report for up-to-date figures on the average RPE by industry. 

A survey by Opex Engine found that for early-stage SaaS businesses under $20M, the average revenue per employee was $120k. Companies with up to $100M in revenue had an average RPE of $168k.   

They surveyed 11 public SaaS companies which gave them the following data: 

Source: OPEXEngine EdgarEngine

Here are the average RPE figures for some of the biggest tech companies: 

Source: tipaliti.com

Compared to some of the world’s most well-established tech companies, the RPE for the SaaS businesses mentioned above is relatively low. This is why it’s essential to measure your RPE against your industry and companies of a similar size.  

In general, the higher your revenue per employee for your industry, the more profitable your business. If you have a high RPE number, you are using your resources efficiently and operating a streamlined operation. 

How can you improve your RPE? 

1. Improve staff turnover

If you have a high staff turnover, it could lower your RPE. A high turnover means you’ll need to invest resources into regularly hiring, interviewing, and training new staff. This will also take up the time of team members who could be doing more meaningful work. 

To avoid high turnover rates, ensure you provide adequate onboarding and training to new team members. Treat your team members as humans, not numbers on your financial reports; this will help them feel valued and more likely to stay at your company long term. Help your staff grow and learn to motivate them and encourage productivity. 

Identify individual team members’ strengths so they can work on projects that match their strengths. It will benefit your retention rate if you put in the groundwork to train your employees well and offer them the support they need to do their job. 

Better employee retention = better revenue per employee.

2. Automate processes 

Increasing your RPE can go hand in hand with regular analysis of your company structure. 

Are there processes that you can automate? Are team structures still efficient? Keeping a close eye on the day-to-day workings of your business can help you align your company structure to improve your RPE. 


Suggested mentors to help you make sense of Revenue Per Employee (RPE)

Vidya Dinamani

CPO @ lash.live | Product Coach @ ProductRebels | Partner at Ad Astra Ventures

I’ve coached product teams all over the world, from startup to Fortune50. I have had executive roles leading product, customer experience and design in leading companies such as Intuit. I love helping founders and product leaders rapidly getting to product-market fit.

Miguel Trujillo

Fundraising + Sales & Business Development Mentor

Hi, my name is Miguel. I am a mentor from Madrid, Spain. I can help you to raise venture capital (10+ yrs of experience) and in business development strategy (sales above all).

Rob te Braake

Founder - Insight Matters

Serial entrepreneur – combining love and experience in Finance, Accounting, Strategy and Coaching.

Ari Bencuya

Entrepreneur and Start-up Mentor

Hi everyone! I’m a serial entrepreneur and start-up founder. I’ve started multiple companies and have had the fortune to sell a few. I’ve also been on the other side of the table as a partner at an incubator/accelerator. I’ve love talking about start-ups and solving problems. Let’s talk!

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