Billable Utilization Rate Calculator
Hours actually charged to clients.
Total working hours in the period (Capacity).
Optional: To calculate revenue impact.
Your agency or company goal.
Your Utilization Rate
0%
Performance vs Target:
0%
Unbilled Capacity (Hours):
0
Realized Revenue:
$0.00
Potential Revenue (at 100% capacity):
$0.00
Revenue Gap (Opportunity Cost):
$0.00
How to Calculate Billable Utilization Rate
The billable utilization rate is one of the most critical Key Performance Indicators (KPIs) for professional services firms, agencies, and consultancies. It measures the efficiency of your workforce by comparing the time spent on revenue-generating activities against the total available working time.
The Formula:
(Total Billable Hours / Total Available Hours) × 100 = Utilization Rate %
(Total Billable Hours / Total Available Hours) × 100 = Utilization Rate %
Why is Utilization Rate Important?
Tracking this metric helps business owners understand profitability and capacity planning. A low rate suggests that you are overstaffed or your team is spending too much time on non-billable tasks (admin, meetings, business development). Conversely, a consistently high rate (near 100%) often indicates a risk of employee burnout and a lack of time for internal growth or training.
Industry Benchmarks
While targets vary by industry and role, general benchmarks include:
- 75% – 85%: Considered the "sweet spot" for production staff (developers, designers).
- 60% – 70%: Common for account managers who have more administrative overhead.
- Below 50%: Often a warning sign for profitability, unless the role is senior management.
Understanding the Inputs
- Total Billable Hours: The actual hours logged that will appear on a client invoice. This excludes pro-bono work, internal meetings, and training.
- Total Available Hours: The gross capacity of an employee. For a standard week, this is usually 40 hours. Some firms prefer to use "Net Capacity" (40 hours minus holidays and PTO).
- Target Utilization: The goal set by the company to ensure profit margins are met.
Optimizing Your Rate
To improve your utilization rate, focus on reducing administrative drag, automating repetitive internal tasks, and ensuring that scope creep is converted into billable change orders. However, avoid aiming for 100% utilization, as non-billable time is necessary for culture building, education, and rest.