Every business tracks revenue. Most track EBITDA. But very few can answer a more fundamental question: how productively are we converting inputs into outputs, and where is that productivity actually coming from?
The Opagio Productivity Calculator was built to make that question answerable in under two minutes. It takes six inputs — revenue, three categories of purchases, labour costs, and capital costs — and produces seven outputs that reveal the underlying productivity dynamics of any business. This guide walks through each component, explains the economics behind the numbers, and shows how to use the results to make better investment decisions.
Traditional financial metrics tell you what happened — revenue went up, costs went down, margin improved. But they do not tell you why. A company can grow revenue by 20% while becoming less productive, if that growth came from proportionally larger increases in labour and capital spending. Conversely, a company can report flat revenue while becoming dramatically more productive, if it has reduced input costs without sacrificing output quality.
Growth accounting — the methodology behind the calculator — decomposes output into three drivers: labour, capital, and Total Factor Productivity (TFP). TFP captures everything that is not explained by changes in labour and capital inputs. In practice, TFP is driven overwhelmingly by intangible assets: better technology, stronger processes, deeper customer relationships, and more effective organisational capital.
TFP is the closest measurable proxy for the economic value created by a company's intangible assets. If your TFP is rising, your intangible assets are working. If it is flat or declining, your intangible investment may not be translating into real productivity gains.
This is why the calculator matters for CEOs, CFOs, and investors. It moves the conversation from "how much did we spend on AI?" to "is that spending actually making us more productive?" — a question that, according to NBER research from February 2026, 90% of firms cannot answer.
The calculator requires six financial inputs, all expressed in GBP. Each corresponds to a distinct component of the growth accounting framework.
Total revenue for the period. This is the gross output measure — the starting point for calculating Gross Value Added. The calculator accepts values from zero to £500 million, with £10 million as the default. For most SMEs, this should be annual revenue from the most recent complete financial year.
Three separate input fields capture intermediate consumption — the goods and services consumed in the production process. The calculator splits purchases into three categories because the economic significance of each differs:
| Purchase Category | What It Includes | Why It Matters |
|---|---|---|
| Services | Professional fees, software subscriptions, outsourced functions, consulting | High service purchases may indicate heavy reliance on external expertise — a signal that internal organisational capital is underdeveloped |
| Energy | Electricity, gas, fuel, water | Energy intensity varies dramatically by sector — manufacturing vs. professional services |
| Materials | Raw materials, components, physical goods consumed | Material intensity is the primary differentiator between asset-heavy and asset-light businesses |
A SaaS company with £10m revenue might have £2m in services purchases (cloud hosting, legal, accounting), £50k in energy, and near-zero materials. A manufacturing company at the same revenue level might show £1m in services, £500k in energy, and £4m in materials. Both generate output, but through radically different input structures.
Total labour costs for the period — salaries, wages, employer NI contributions, pension contributions, and benefits. This is the single largest input for most service-sector businesses and the numerator in the labour productivity calculation.
Do not confuse labour services with headcount. The calculator uses the total cost of labour, not the number of employees. A company with 50 highly-paid specialists may have higher labour services than a company with 200 lower-paid workers — and the productivity implications are very different.
The cost of using physical and financial capital — depreciation, amortisation of tangible assets, equipment leases, and the imputed cost of capital employed. For growth accounting purposes, capital services represent the flow of services from the capital stock, not the stock itself.
The calculator produces three primary metrics and four secondary metrics, all updated in real time as you adjust the inputs.
Formula: Revenue − Total Purchases (Services + Energy + Materials)
GVA measures the value a company adds through its own productive activities, after stripping out the cost of intermediate goods and services consumed. It is the national accounts definition of economic output at the firm level — the same metric used by the ONS and OECD to measure national productivity.
GVA is more meaningful than revenue for productivity analysis because it removes the double-counting problem. A company that outsources heavily will have high revenue but low GVA relative to its workforce. A company that does everything in-house will show lower revenue growth but higher GVA per worker.
GVA is the foundation for all other productivity metrics in the calculator. If your GVA is low relative to revenue, it means a large proportion of your output value is being captured by suppliers rather than created internally. This is not inherently bad — but it has significant implications for where your intangible value resides.
Formula: GVA − Labour Services − Capital Services
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) needs no introduction to most business leaders, but the calculator contextualises it within the growth accounting framework. EBITDA represents the residual value after paying for all factor inputs — it is what remains after labour and capital have been compensated.
In the context of intangible asset analysis, EBITDA is particularly important because it is the metric most commonly used in valuation multiples. PE firms price acquisitions as a multiple of EBITDA. Understanding which input changes drive EBITDA movements — and whether those changes are sustainable — is the difference between a well-priced deal and an expensive mistake.
The calculator derives EBITDA from the growth accounting decomposition (GVA minus factor inputs), not from the income statement. This means you can see exactly which input — labour, capital, or intermediate purchases — is driving changes in EBITDA, rather than treating it as a single bottom-line number.
Formula: GVA ÷ (L^α × K^(1−α))
TFP is the headline metric — the one that tells you whether your business is becoming more or less efficient at converting inputs into outputs, independent of how much labour and capital you deploy. The calculator uses a Cobb-Douglas production function, which is the standard approach in growth accounting.
The Cobb-Douglas function weights labour (L) and capital (K) by their respective output elasticities (α and 1−α). The standard assumption is α = 0.6 for labour and 0.4 for capital, reflecting the typical income share split in advanced economies. TFP is the ratio of actual output (GVA) to the predicted output from labour and capital alone. A TFP above 1.0 means the business is producing more output than its raw inputs would predict.
What drives TFP in practice? The economic literature is clear: intangible assets. When a company invests in better software, more effective training programmes, stronger customer relationships, or more efficient processes, those investments show up as rising TFP. The inputs (labour and capital) stay the same or grow slowly, but output grows faster — because the invisible assets are making every unit of labour and capital more productive.
The calculator also produces four secondary metrics that provide additional diagnostic value:
| Metric | Formula | What It Tells You |
|---|---|---|
| Labour Productivity | GVA ÷ Labour Services | How much value each pound of labour cost generates. Higher is better. |
| Capital Productivity | GVA ÷ Capital Services | How efficiently physical and financial capital is being deployed. |
| Purchases Intensity | Total Purchases ÷ Revenue | What proportion of revenue is consumed by intermediate inputs. Lower means more value is created internally. |
| EBITDA Margin | EBITDA ÷ Revenue | The classic profitability metric, contextualised within the productivity framework. |
The calculator is most powerful when used to model scenarios — adjusting inputs to see how changes flow through to productivity metrics.
You are considering a £500k AI investment that would reduce services purchases by £300k (by automating tasks currently outsourced) and increase capital services by £100k (the AI platform cost). Enter your current figures, note the baseline TFP. Then adjust: reduce services by £300k, increase capital by £100k. Watch how GVA rises (lower purchases), EBITDA improves, and TFP increases. This is the quantitative case for your board.
You plan to hire 10 additional engineers at £80k average cost (£800k total). Will this investment pay off in productivity terms? Enter your current figures, note baseline labour productivity and TFP. Then increase labour by £800k. If you expect those engineers to generate additional revenue, increase revenue proportionally. Compare: does labour productivity improve or decline? If TFP stays flat, the new hires are maintaining efficiency. If TFP rises, they are making the entire business more productive — a sign that your engineering team is creating intangible assets.
You are evaluating an acquisition target. Enter the target's financials from their last three years, one year at a time. Track how TFP, labour productivity, and EBITDA margin have moved. A company with rising revenue but flat or declining TFP is growing through input accumulation, not productivity improvement — a red flag for post-acquisition value creation. A company with modest revenue growth but rising TFP has strong intangible assets that could be leveraged across a portfolio.
The calculator's power is in comparative analysis. A single snapshot tells you where you are. Multiple scenarios tell you where different decisions will take you — and whether your intangible asset investments are translating into measurable productivity gains.
The Productivity Calculator provides a simplified, point-in-time estimate. It is designed to be the starting point — the moment when a CEO, CFO, or investor sees their productivity metrics clearly for the first time and asks: "How do I track this over time?"
That question leads naturally to the Opagio Growth Platform, which connects to your actual financial data (via Xero, CSV upload, or API) to calculate GVA, EBITDA, TFP, and a full suite of intangible asset metrics continuously. The Growth Platform adds what a calculator cannot: trend analysis over 3, 5, or 10 years; benchmarking against industry peers; scenario modelling with multiple variables; and investor-grade reports that translate productivity data into the language of valuation.
For a deeper understanding of the intangible assets driving your TFP, the Intangible Asset Valuator provides structured valuation across 7 asset categories and 35 asset types, using six valuation methods compliant with IFRS 3 and ASC 805.
The productivity calculator implements a methodology that has been central to economics for decades but has rarely been accessible to individual businesses. Growth accounting was pioneered by Robert Solow in the 1950s and refined by Dale Jorgenson, Charles Hulten, and others through the late twentieth century. The Corrado-Hulten-Sichel (CHS) framework, published in 2005, extended growth accounting to explicitly include intangible investment — recognising that categories like software, R&D, organisational capital, and brand equity are genuine capital investments that drive output growth.
The reason this matters now is straightforward. In an economy where 92% of S&P 500 value is intangible, the traditional metrics that most businesses rely on — revenue, cost, margin — miss the mechanisms that actually create value.
Growth accounting, and TFP in particular, is the bridge between what accounting standards measure and what actually drives enterprise value.
Total Factor Productivity (TFP) — the portion of output growth that cannot be explained by increases in labour or capital inputs. In practice, TFP captures the cumulative effect of intangible asset investment: better technology, stronger processes, deeper customer relationships, and more effective organisational capital.
The calculator makes this accessible. No economics degree required. Enter six numbers, and the growth accounting framework does the rest.
Try the Productivity Calculator now — it takes less than two minutes, and the insights may change how you think about your next investment decision.
Ivan Gowan is the CEO of Opagio. He spent 15 years as a senior technology leader at IG Group (LSE: IGG), overseeing engineering growth from 4 to 250 people during the company's rise from £300m to £2.7bn market capitalisation. Learn more about the team.
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