Revenue per PM


Last week I asked the question, How much revenue for each PM in your company? with a link to a survey. The survey was intended as a “quick and dirty” sampling of data to get some numbers related to revenue ratios for Product Managers. Truly a more analytic survey would be in order to get more broad-based industry wide data. Perhaps our friends at Pragmatic Marketing or Forrester can take this task on.

The survey asked the following questions:

1. What kind of company do you work for?

  • Public
  • Private

2. How many product managers are there in your company (or division of the company in which you work)?

3. What is the annual revenue (in millions of $) of your company (or division of the company in which you work)?

4. Which of the following best describes the type of technology your company (or division in which you work) primarily provides?

  • Software
  • Software as a Service (or hosted applications)
  • Hardware (e.g. servers, routers etc.)
  • Software and Hardware (e.g. hardware appliances)
  • Other

5. Which of the following best describes the main target customers for your company’s products or for the product of the division in which you work?

  • Consumers
  • Businesses
  • Government
  • Other

6. If you answered Other in question 5, please specify the type of business.

7. Do you have any questions or comments about this survey?

And here are the results. Thanks to all those of you who responded. Note that I’ve rounded all revenue numbers to the nearest million.

Total Number of Respondents: 67

Break out by Company Type

  • Number of Public Companies 26
  • Number of Private Companies 41

Number of Companies by Technology Focus

  • Software: 29
  • Hardware: 3
  • Software and Hardware: 17
  • SaaS/Hosted: 15
  • Other: 3

Number of Companies by Customer Focus

  • Business:50
  • Consumer: 12
  • Government: 4
  • Other: 1

Annual Revenue Range for Public Companies:

  • Smallest: $10 Million
  • Largest:$1.5 Billion
  • Average: $341 Million

Annual Revenue Range for Private Companies:

  • Smallest: $0-1 Million
  • Largest: $1 Billion
  • Average: $58 Million

Average Annual Revenue (in $millions) by Company Type

Average Revenue

Private

Public

All

Hardware

30

250

177

Software

28

310

135

SW and HW

79

283

187

Saas/Hosted

19

600

174

Other

338

3

All

58

341

168

NOTE: The “All” column/row is the overall average for that column/row. e.g. 177 represents the average revenue for ALL hardware companies.

There is significant breadth in the data here. If we exclude the “Other” row, the Public companies have revenues roughly 10 times that of the Private companies.

Average number of Product Managers by Company Type:

Ave. # of PMs

Private

Public

All

Hardware

1.0

3.8

2.8

Software

3.4

13.1

7.1

SW and HW

5.4

9.1

7.4

SaaS/Hosted

3.5

11.0

5.5

Other

4.7

4.7

All

3.8

10.7

6.5

Even though the Public companies had roughly 10x the revenues of the private companies, the number of product managers in Public companies is only about 3x that of Private companies. While I don’t have data to support this conclusion, my own experience having worked in both public and private software companies is that these numbers are not far from reality.

Average Annual Revenue (in $millions) per PM by Company Type: (Calc 1)

Ave. Rev. Per PM

Private

Public

All

Hardware

30.0

66.7

62.4

Software

8.3

23.7

19.1

SW and HW

14.7

31.1

25.5

SaaS/Hosted

5.4

54.5

31.8

Other

72.4

72.4

All

15.2

31.9

25.8

NOTE: Averages were calculated as overall average. i.e. sum of all revenue per category divided by sum of product managers for those companies.

Average Annual Revenue (in $millions) per PM by Company Type: (Calc 2)

Ave. Rev. Per PM

Private

Public

All

Hardware

30.0

55.0

46.7

Software

9.5

22.9

14.6

SW and HW

9.7

44.2

28.0

SaaS/Hosted

5.1

75.3

23.8

Other

32.1

32.1

All

10.5

40.8

22.2

NOTE: Averages were calculated as average of ratios. i.e. each company’s revenue/PM ratio was calculated and an average was taken of all companies falling into each bucket above.

Comparing Calc1 and Calc2

As you can see that while there are some similarities in the numbers between Calc1 and Calc2, there are also some significant differences. For example, while the corresponding Software numbers are close to each other across the tables, the Private-Other numbers are very different (72.4 vs. 32.1). This is because Calc1 will skew the data if there are large outliers in the data. e.g. The Private-Other only has 3 data points and they vary widely in revenue, thus skewing the Rev/PM.

Calc2, takes an average of ratios, so that widely ranging revenue (or PM) numbers aren’t going to skew the data as much. I’ve combined those two tables into the following table that gives a range for each bucket.

Ave. Rev. Per PM

Private

Public

All

Hardware

30.0 – 30.0

55.0 – 66.7

46.7 – 62.4

Software

8.3 – 9.5

22.9 – 23.7

14.6 – 19.1

SW and HW

9.7 – 14.7

31.1 – 44.2

25.5 – 28.0

SaaS/Hosted

5.1 – 5.4

54.5 – 75.3

23.8 – 31.8

Other

32.1 – 72.4

32.1 – 72.4

All

10.5 – 15.2

31.9 – 40.8

22.2 – 25.8

So, how do these numbers compare to the situation in your company? Drop us a line…

Disclaimer: Take the data for what it’s worth. I’m not a statistician. The data set is small (67 completed surveys) and when subdivided by Public/Private and Software/Hardware/SaaS/SW+HW etc. the numbers of data points in each bucket can be quite small and thus the error bars around any calculations can be significant. Don’t blame me if you use this data and bad things happen to you. But if good comes from using the data, drop me a line and send some of that good karma my way. If you do use this data in any presentations or other publications, please reference the blog. Remember, even on the Web, plagarism still means stealing someone else’s ideas and presenting them as your own. 🙂

Saeed

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2 responses to “Revenue per PM

  1. Pingback: How much revenue for each PM in your company? « On Product Management

  2. Thanks for doing this survey. I think this was based on my question. Although I work in medical equipment, the numbers look pretty close to what we thought. $30 to $40 MM per product manager. The Saas nos look a bit higher, but maybe that is due to fact is slightly different.

    Allen EHrlich