Divide revenue by headcount or FTE to compare productivity across periods and locations.
Revenue per employee = revenue ÷ average employees or FTE.
Revenue per labor hour = revenue ÷ total hours worked.
A cleaning company earns $1,800,000 in a year with an average of 12 FTE working 24,000 hours. Revenue per FTE is $150,000 and revenue per labor hour is $75.00.
Use it to track productivity over time or compare locations of the same business. Comparisons across industries mean little, because labor intensity differs so much.
FTE gives a fairer number than headcount when you have many part-time employees.
A landscape design-build firm brings in $640,000 in its spring quarter with an average of 9.5 FTE, counting two part-time designers as one FTE between them. Revenue per FTE for the quarter is $67,368. Crews and office staff logged 4,940 hours, so revenue per labor hour is $129.55, which does not depend on how hours are split among people.
Revenue per employee rises when people work more hours, so an overtime-heavy period can look productive even though costs rose too. Use FTE rather than headcount when many staff are part-time, since headcount counts a part-timer as a whole person. Revenue per labor hour appears only when you enter hours, and those hours must cover the same period as the revenue.
FTE converts a mixed team into full-time equivalents. A common method divides total paid hours by 2,080 for a year. A fictional cleaning company with 9 full-time staff and 3 part-timers who each work 20 hours a week has 9 + 1.5 = 10.5 FTE. With $1,260,000 of revenue, that is $120,000 per FTE, compared with $105,000 per head if you divided by all 12 people.
EZTime exports hours to Excel or PDF, which gives you the hours for step two in one report.
FTE is fairer with part-time staff.
Any, as long as revenue and employees cover the same period.
Compare with your own history and similar businesses.
No, combine it with margins.
Yes. Enter the quarter’s revenue and the average FTE for those three months. Do not compare the result with yearly figures unless you multiply by four, and only when the quarter is a typical one.
Count owners who do the same work as staff, or a small business will look more productive than it is. In a 5-person shop, leaving out one working owner lifts revenue per employee by a quarter.
Count paid hours if you want FTE to match payroll, or hours worked if you want productivity. Use the same choice every period.
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