# What is Payout ratio?

> Payout ratio is the share of a prop firm's revenue paid out to traders as performance rewards over a period, the key measure of whether the model is sustainable.

- Source: https://pipvalley.com/glossary/payout-ratio
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm, payout ratio is usually total performance rewards paid divided by total fee revenue for the same period. Some firms use net revenue after refunds, chargebacks and affiliate commissions, which gives a more honest figure.

The ratio moves with pass rate, profit split, scaling, payout caps and market conditions. A strong trending month can raise it sharply, which is why firms track it monthly and by cohort, not just annually.

Because payouts lag purchases, a quickly growing firm can show a low ratio that rises later as its funded cohort matures.

## Why it matters

Payout ratio tells you whether you can afford your own rules. Model it before changing splits or launching instant funding, and watch it by product and channel. Some firms publish payout totals; if you publish anything derived from this ratio, define it and keep it current.