Revenue Per Employee

Total revenue divided by the average number of full-time equivalent staff over the same period. Part-time staff are counted pro rata, and regular contractors are usually included where they do work that employees would otherwise do.

It is a plain test of whether growth is making the business stronger or just bigger. If revenue rises while this figure falls, each new hire is bringing in less than the last, and margins will follow. It also gives a quick check against peers, and helps judge whether a planned hire is justified by the work already secured.

Use average headcount across the period, not the number at the year end, or a recent hire will distort the result. Be consistent about contractors: include them or exclude them, and say which. Read it alongside gross margin, since a business that passes large third-party costs through its revenue will look more productive than it is. The trend over several years matters more than any single figure.