Human Capital Efficiency (HCE)

The single largest resource cost in a SaaS business model is people, i.e. payroll and related items. A proxy for operating efficiency is the ratio of top line metrics, such as ARR, CARR or Revenue, to Employees. You can use any number of benchmark services such as the Key Banc SaaS Survey or the OPEXEngine SaaS benchmarking service for comparison. Keep in mind that the HCE varies proportionally to size – the larger the company the greater the scale – and does so more than other unit economic metrics.

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