SaaS Revenue per Employee Benchmarks for B2B Companies

A useful metric for SaaS businesses is the amount of Annual Recurring Revenue (ARR) per employee. A high revenue per employee implies the efficiency of the business and is a proxy for it’s ability to break-even or become profitable (the majority of expenses for tech companies is people). As the business starts to scale, revenue per employee is expected to increase.

The table below shows the result of a survey by SaaS Capital looking at the median ARR per full time employee in 2022 for venture backed companies.

The table below shows the result from Capchase grouped by sector in H2 2022.

See also:

• SaaS churn benchmarks are another useful measurement for figuring out the efficiency of a SaaS business (if churn is high, the amount of growth required to replace old customers goes way up)
• Burn multiples along with revenue per employee can be a short-hand way of keeping burn in check—e.g. set a headcount cap until you hit the revenue goal to stay on track

Links to this note

• B2B Benchmarks

  A collection of benchmarks for B2B businesses (mostly relevant for early-stage SaaS).

• Time to First Million ARR

  One way to measure product market fit is to look at the time it takes between putting a product out in the market to the first $1MM in ARR.

• Net Magic Number

  Net magic number is a measurement of go-to-market (GTM) efficiency for SaaS businesses. A magic number less than 1.0 indicates the business will lose money on each customer. Top SaaS businesses making less than $25MM in revenue per year have a magic number of 1.7 according to benchmarks from Iconiq Capital as in their business returns 1.7x for every sales and marketing dollar they spent to acquire customers.