What are average expenses per employee?

Only efficient companies will be able to raise money in 2024. But how good is “good enough”? In this edition of Pilot Insights, we take a look at expenses per employee as a proxy for efficiency.

‍First, clarification on the methodology: we looked at a company’s total expenses, subtracted out payroll expenses, and divided that number by total employee count. So if one company has a large, expensive office, a huge marketing budget, and a giant bill for GPUs, their expenses per employee will be much higher than the less-extravagant fully-remote B2B SaaS company.

In our dataset, the average company spends $131k per employee per year—in addition to their payroll expense. Some of the most efficient companies were able to shave that down to $57k, and the most inefficient (extravagant?) end up spending almost 1.5x the median, at $203k per employee.

How can you reduce expenses per employee? Take a hard look at nonessential expenses, asking: do we really need to pay for this particular thing? I recommend closely examining two categories in particular: business travel (where it’s easy to accidentally spend lots of money), and unused SaaS subscriptions (because they’re recurring.)