Full-time equivalent (FTE)
also known as FTE
A way of expressing mixed full-time, part-time and freelance hours as a number of full-time people, used for capacity and cost planning.
For example, two people at half time and one freelancer doing roughly two days a week add up to about 1.8 FTE. Expressing the team this way makes capacity and cost comparable, regardless of how the hours are actually staffed.
Why it matters to your firm: FTE turns a messy mix of full-time, part-time and freelance hours into one comparable number, which is essential for capacity planning and pricing. It lets an agency reason about how much delivery power it really has and what that power costs.
FTE = total worked hours ÷ full-time hours for the period
E.g. someone working 20 of a 40-hour week is 0.5 FTE.
FTE calculator
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- Confusing headcount with FTE.
- Ignoring part-timers and contractors in capacity.
- Planning on FTE without allowing for non-billable time.