Definition
Revenue per employee (RPE) measures how much revenue a company generates divided by the number of employees. It’s a rough indicator of efficiency and scalability.
Why revenue per employee matters in SaaS
- Efficiency signal- High RPE means the company is generating more revenue per headcount, often a sign of lean operations or strong automation.
- Investor benchmark- VCs and analysts use RPE to compare SaaS companies at similar stages. A company at $200k ARR per employee looks very different from one at $50k.
- Scaling discipline- As companies grow, bloated headcount without corresponding revenue growth drags down RPE.
- GTM strategy lens- SMB-heavy SaaS companies usually have lower RPE (more support-intensive), while enterprise SaaS companies often achieve higher RPE with fewer but larger contracts.
Example of calculating revenue per employee (RPE)
A SaaS company generates $20M ARR with 200 employees.
RPE= 20,000,000/200= 100,000
So the company generates $100k in revenue per employee.
Common pitfalls
- Stage-blind comparisons- Early-stage companies naturally have lower RPE because they’re investing ahead of revenue.
- Mixing FTEs and contractors- Not counting outsourced roles can artificially inflate RPE.
- Over-simplification- RPE doesn’t capture profitability, retention, or CAC efficiency.
AI prompt
What to provide the AI beforehand
- Current ARR or total revenue
- Total number of employees (FTEs + contractors if possible)
- Company stage and segment (SMB SaaS vs. enterprise SaaS)
- Recent hiring trends (engineering-heavy, GTM-heavy, etc.)
- Context on growth vs. profitability priorities
Act as the CFO of a [seed-stage / Series A / growth-stage] SaaS company with revenue of [insert $X] and [insert headcount]. Calculate revenue per employee (RPE) and compare it to benchmarks for [insert SaaS segment, e.g., SMB-focused, enterprise SaaS]. Highlight whether RPE suggests lean efficiency or overstaffing, and recommend 2-3 strategies to improve efficiency without hurting growth.
