For services and staffing businesses, utilization rate, billable hours as a share of total available hours, is one of the most closely watched numbers in the business, and the one most likely to be quietly inflated by a bad set of inputs. Work out the rate below and compare it against a target if you set one.
The math here is simple, billable hours divided by available hours, but the result is only as good as your inputs. Available hours should already exclude planned leave and holidays, or the rate will look artificially low. Definitions of “billable” also vary between organizations, some count internal or non-billable project work toward utilized time, others count only client-billable hours strictly. Whichever definition you use, stay consistent, otherwise comparisons across teams or time periods become meaningless.
This varies enormously by business model and role, there’s no universal number, most organizations set their own target based on their specific cost structure and billing model rather than an external benchmark.
Directly, unbilled hours across a team eventually show up as bench cost. Our Bench Cost Calculator works out what that unbilled time is actually costing you.
Almost always non-billable, but it’s still a necessary investment, exclude it from your billable hours numerator but don’t treat consistently low utilization from heavy training periods the same as a demand problem. Our Training Cost Per Employee Calculator covers what that investment is actually costing separately.
Monthly is common for active management, though trends over a full quarter give a more reliable read than any single month, which can be skewed by holidays or one-off projects.
It can inflate billable hours without a proportional increase in available hours, check our Overtime Cost Calculator alongside this one if your utilization looks unusually high for a stretched team.