Labor as a percentage of revenue
Last updated
Quick Answer
Labour as a percentage of revenue is fully loaded labour cost divided by revenue.1
Formula
fully loaded labor cost / revenue
What it is
Fully loaded means wages plus payroll taxes, insurance, benefits and paid time off — not base wages, which is where most self-computed versions of this go wrong. It is the dominant cost line in nearly every acquirable service business, which makes it the ratio most worth measuring consistently and least worth comparing casually.1
Operational context
What good looks like
Why It Matters
It is where an inherited overtime habit, an unproductive crew and a pricing problem all surface, and telling those three apart requires the applied-hours detail underneath the ratio rather than the ratio itself.1
Term Family
Related concepts
Tools & Resources
Frequently Asked Questions
What is Labor as a percentage of revenue in venture capital?
Fully loaded means wages plus payroll taxes, insurance, benefits and paid time off — not base wages, which is where most self-computed versions of this go wrong.
Why is Labor as a percentage of revenue important for startups?
Understanding Labor as a percentage of revenue is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.A2-10 — Deltek Clarity A&E Industry Study, 47th annual, 896 firms, FY2025Deltek Clarity A&E Industry Study, 47th annual, 896 firms, FY2025Academic / institutional primary(Labour as a percentage of revenue is fully loaded labour cost divided by revenue.)primary · A2 · kpi-instrumentation · metric
Newsletter
OperatorBeast Brief
Operating playbooks and portfolio execution. Every Tuesday.
OperatorBeast Brief
The weekly brief for operators
Weekly playbooks on portfolio operations, management cadence, and execution systems. Every Tuesday, free.
Archstone
Run your fund like an institution.