What is APER (Annualized Productivity to Engineering Ratio)?
APER measures revenue generated per engineer, annualized.
APER measures revenue generated per engineer, annualized. It is Richard Ewing's recommended alternative to velocity metrics like story points, which measure effort rather than value.
APER = Annual Recurring Revenue ÷ Total Engineering Headcount
Benchmarks: early-stage startups typically have APER of $100-200K. Growth-stage companies target $200-400K. Mature SaaS companies achieve $400-800K. The best-in-class (Canva, Zoom at peak) exceed $1M per engineer.
APER trends are more important than absolute values. Increasing APER means engineering is becoming more efficient. Declining APER means each new hire produces diminishing returns — a sign of organizational complexity, technical debt, or poor product-market fit.
APER should be segmented: product engineering vs. platform engineering vs. infrastructure. Product engineering should have the highest APER because they directly build revenue-generating features.
Why It Matters
APER is the most honest measure of engineering efficiency because it connects engineering headcount to revenue outcomes. It answers the question every board asks: "Are we getting enough value from our engineering investment?"
How to Measure
1. **Total APER**: ARR ÷ total engineering headcount.
2. **Product APER**: ARR ÷ product engineering headcount.
3. **Trend**: Track quarterly. Declining APER is an early warning signal.
4. **Benchmark**: Compare against industry averages for your stage and vertical.
Frequently Asked Questions
What is APER?
Annualized Productivity to Engineering Ratio = ARR ÷ total engineering headcount. It measures revenue generated per engineer and is a better efficiency metric than story points.
What is a good APER?
Early-stage: $100-200K. Growth: $200-400K. Mature: $400-800K. Best-in-class: $1M+. More important than the absolute number is whether APER is trending up or down.
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Richard Ewing is a Product Economist and AI Capital Auditor. He helps companies translate technical complexity into financial clarity.
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