Are we paying more or less per dollar of revenue over time?
№ 212 · All-in comp efficiency curve
Definition
MetricRevenue generated per dollar of total compensation cost
UnitUSD of revenue per USD of compensation
Line showing fully-loaded comp divided by revenue contribution over time. A leverage indicator at the company level. Build per-role cohort. Cohorts compounding productivity over tenure show as the curve dropping. Example: Year 1 ratio 8x; Year 2 4x; Year 3 2x.
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| $1.19 of revenue per $1 of salary cost | $1.50 of revenue per $1 of salary cost | $2.30 of revenue per $1 of salary cost |
Private B2B SaaS startups in the US, Canada and Australia, inverse of salary cost divided by gross revenue, accounting data aggregated 2020 to 2024 · This is the inverse of the compensation ratio card, expressed so that the line reads upward when efficiency improves. It is salary only, so a fully loaded version of the same curve sits roughly 30% lower given that benefits are 30.1% of employer compensation cost. The important property of this chart is its floor: merit and total increase budgets for 2026 sit at 3.2% and 3.5% per Mercer, 3.6% projected per WorldatWork, and actuals landed at 3.1% and 3.4%, so a company with flat headcount and flat revenue watches this curve decline by about 3.5% a year through pay inflation alone. Pay increases are also close to uniform across levels, with 83% of Mercer respondents spreading budget equally rather than targeting critical skills, so the drag is broad rather than concentrated.
Category split omitted: The salary-budget datasets publish means by country and industry rather than quartiles of the efficiency ratio itself, so a category table would mix an input rate with an output ratio.
When it looks bad
The curve declines gently and continuously across several quarters with no single visible break, which is the signature of pay inflation outrunning revenue rather than of any one hiring decision.
Revenue per compensation dollar slides from $1.62 to $1.51 over six quarters while headcount is flat, which is a 3.6% annual erosion matching the market merit budget.
What to do about it
- Budget the merit pool against the curve, not against the market average. Mercer's 2026 planned merit is 3.2% and actual delivery came in at 3.1%, so a company holding the curve flat needs revenue growth above that before any headcount is added.
- Differentiate the increase pool by band position. 83% of employers spread the budget equally per Mercer, which is the cheapest thing to do administratively and the most expensive over three years, because top performers low in band leave and get replaced at market plus a recruiting fee.
- Separate the curve for revenue-generating and non-revenue-generating headcount. The blended curve moves for reasons that have nothing to do with either group, and the split usually shows one of them carrying the whole decline.
- Set geographic increase budgets locally rather than centrally. WorldatWork reports 2026 budgets of 3.6% in the US, 3.5% in Canada, 3.8% in the UK and 8.8% in India, so a single global increase percentage overpays in one market and loses people in another.
Sources
- Lighter Capital Salary as a percent of revenue: 25th percentile 43.67%, median 66.77%, 75th percentile 83.99%. Salary as a percent of operating expense: median 55.29%. lightercapital.com ↗
- Mercer 2026 merit increases budgeted at 3.2% and total increases at 3.5%. Healthcare services and retail sit lower at 2.9% merit, while financial services, energy and high tech budget 3.7% total. 83% of employers spread the budget equally rather than targeting critical skills. mercer.com ↗
- WorldatWork US organizations project mean salary increase budgets of 3.6% for 2026 against 3.7% actual in 2025. Canada projects 3.5%, the UK 3.8% and India 8.8%. worldatwork.org ↗
- WorldatWork reporting Mercer QuickPulse Mean merit increases paid in 2026 came in at 3.1% and total increases at 3.4%, below the 3.2% and 3.5% projected in October 2025. High tech led at 3.6% total, retail and wholesale at 3.1%. worldatwork.org ↗
- WorldatWork reporting Salary.com US 2026 budgets break into 3.3% merit, 1.7% general increase and 0.7% equity or market adjustment. Executive variable pay was budgeted at 30.5% of base. worldatwork.org ↗
- US Bureau of Labor Statistics Private industry compensation cost averaged $46.60 per hour worked. Wages and salaries were 69.9% of employer cost and benefits 30.1%, implying a fully loaded cost of roughly 1.43 times base pay. bls.gov ↗
- Aleph and Benchmarkit Median ARR per employee $193K, up 29% from $150K. Top quartile about $279K, bottom quartile $126K, usage-based pricing companies $291K. getaleph.com ↗
- High Alpha Later-stage companies approach $400,000 ARR per employee, close to public SaaS medians. Engineering was the function most often cut, with 42% of companies reporting reductions. highalpha.com ↗
- SaaS Capital Median revenue per employee for private SaaS is $141,125 in 2026, up from $129,724 the prior year. At $1M to $3M ARR the median is $109,644. At $5M to $10M ARR, equity-backed companies run $152,295 versus $177,240 for bootstrapped. saas-capital.com ↗