Revenue for a period divided by the average number of full-time equivalent employees in it.
Revenue per employee is a broad productivity measure: how much revenue the business brings in for each person it employs. It is most useful compared within one company over time, or between practices or teams doing similar work, because it varies widely by industry and business model.
Revenue per employee = revenue for the period ÷ average full-time equivalent (FTE) headcount over the same period. Count part-time staff by their share of a full-time week, and state whether contractors are included.
A firm with annual revenue of $24,000,000 and an average of 120 FTEs has revenue per employee of $200,000. If headcount ends the year at 140 but averaged 120, using the closing figure would understate it at about $171,400.
Using year-end headcount in a year of hiring. Comparing a business that outsources delivery with one that employs its staff, which flatters the first. Rising because of price increases or pass-through costs rather than productivity. The full guide is revenue per employee.