A Full-Time Equivalent is a unit of workforce measurement where one FTE equals one employee working a standard full-time schedule (typically 40 hours per week in the US). Two half-time employees equal one FTE; a contractor billing 2,000 hours per year is approximately one FTE. The abstraction simplifies workforce planning across different employment arrangements.
FTE is the standard denominator for workforce economics. Per-FTE cost (loaded salary plus benefits plus overhead) is the baseline for layoff cost-savings math, productivity comparisons, and outsourcing analyses. Enterprise software pricing is often quoted per-seat, per-user, or per-FTE — the distinctions matter for long-term cost modeling.
In the autonomous coworker era, FTE has become a bridge concept: enterprise AI products are increasingly priced against the displaced FTE rather than as per-seat SaaS. A $18,000/year autonomous coworker is compared against a $95,000 loaded FTE, not against a $240/year Copilot seat. This shift in pricing logic is one of the most consequential changes in enterprise software commercial strategy in decades.