Utilization rate: formula, example and benchmarks
Billable utilization rate is the percentage of available working hours spent on billable work. Calculate it as billable hours ÷ available hours × 100. A designer who bills 125 of 152 available hours in a month has a billable utilization rate of 82.2%. Subtract holidays and leave from available hours before calculating the rate.
Disclosure: We make Timen, a free time tracker with reports and invoicing. The benchmarks and leave figures below come from SPI Research, Deltek, Clio and the US Bureau of Labor Statistics.
What is the utilization rate formula?
Billable utilization rate = billable hours ÷ available hours × 100. Both figures must cover the same person and period: a week, month or year. Someone with 30 billable hours and 40 available hours in a week has a utilization rate of 75%.
Billable hours are the hours a client has agreed to pay for, whether or not they have been invoiced yet. Available hours are the hours the person was contracted to work in that period, minus public holidays, vacation, sick days and any other leave. Meetings, admin and internal projects are not taken out of available hours. They are the part of the week that did not turn into billable work, which is exactly what the rate is meant to show.
Dividing billable hours by total hours worked gives a different measure, usually called the billable share or billable ratio. Use that ratio to see how much tracked work was chargeable. Use utilization to compare billable work with available capacity. The billable ratio alone cannot show whether someone was idle, overloaded or away for a week.
How do you calculate available hours?
Start with contracted hours, then subtract public holidays, vacation and sick days. Fifty-two weeks of 40 hours gives 2,080 hours before any time off. Using that full amount after someone takes leave understates their utilization and can make a full workload look light.
The US Bureau of Labor Statistics figures illustrate the difference. Private industry workers with paid holidays got an average of 8 paid holidays in 2025. For vacation, the BLS National Compensation Survey for March 2026 puts the average at 11 days after one year of service, 16 after five years, plus 7 days of sick leave.
| Step | Hours | What it assumes |
|---|---|---|
| Contracted year | 2,080 | 52 weeks of 40 hours, no time off |
| Minus 8 public holidays | 2,016 | BLS average for private industry, 2025 |
| Minus 11 vacation days | 1,928 | BLS average after one year of service, March 2026 |
| Minus 7 sick days | 1,872 | BLS average sick leave, if it all gets used |
A target of 75% billable on 2,080 hours asks for 1,560 billable hours a year. The same 75% on 1,872 available hours is 1,404. That gap of 156 hours is almost a month of full-time work, demanded from someone who is already hitting the target.
Use your own numbers rather than these averages. Take each person's contracted hours, so a four-day week counts as 32, and take out the holidays your business closes for and the leave each person actually takes. Do it per person and per period: a month where someone took a week off should not make them look underused.
Billable or total utilization: which should you track?
Track both. Billable utilization measures billable hours as a share of available hours. Total utilization measures all tracked work, billable and non-billable, as a share of available hours. The first shows chargeable work; the second shows how much capacity is used.
The gap between the two is the useful part. A developer at 77% billable and 93% total spends about 16% of their time on internal work, which is probably fine. A project manager at 50% billable and 92% total is fully occupied, just not on client work, and the question becomes whether that time should be billed, priced into the project, or cut. Someone at 60% billable and 65% total has room, and that is the person to give the next project.
Total utilization only works if non-billable time is tracked as carefully as billable time, in the same tool and with the billable flag switched off. If internal work goes unrecorded, total utilization looks low for the people who do the most of it.
How do you calculate a five-person agency's utilization?
Divide the team's billable hours by its available hours. In this sample month for a five-person design and development agency, 524 billable hours ÷ 824 available hours gives 63.6% billable utilization.
The figures are sample data, not a real company. The month has 22 weekdays and one public holiday, so a full-time person has 21 days of 8 hours, or 168 available hours. One designer took two days of leave, which leaves 152.
| Role (sample) | Available hours | Billable hours | Non-billable hours | Billable utilization | Total utilization |
|---|---|---|---|---|---|
| Owner and account lead | 168 | 67 | 85 | 39.9% | 90.5% |
| Senior designer | 168 | 118 | 32 | 70.2% | 89.3% |
| Designer, two days of leave | 152 | 125 | 20 | 82.2% | 95.4% |
| Developer | 168 | 130 | 26 | 77.4% | 92.9% |
| Project manager | 168 | 84 | 70 | 50.0% | 91.7% |
| Team | 824 | 524 | 233 | 63.6% | 91.9% |
Three things stand out. The team runs at 63.6% billable, a little under SPI Research's cross-industry average, and that is mostly because two of the five roles are not meant to bill much. The designer who took leave has the highest billable rate on the team, which only shows because their leave came out of available hours. And total utilization is above 89% for everyone, so there is no hidden slack: the way to more billable hours is moving internal work off the owner and the project manager, not asking the designers for more.
Using a fixed monthly average changes the result: 40 hours times 52 weeks divided by 12 gives 173.3 hours each and 866.7 for the team. Billable utilization drops to 60.5%, and the designer's leave disappears from the calculation. This adds about 43 hours of availability that did not exist. At the team's own 63.6%, that is 27 billable hours, or about $2,700 a month at a sample rate of $100 an hour, that the team appears to be missing and never had.
What is a good utilization rate?
For full-time delivery staff, somewhere around 70 to 80% billable, and lower for anyone whose job includes selling or managing. A team average in the 60s is normal for most service businesses. The published benchmarks below measure slightly different things, so read the notes before comparing your number with any of them.
| Source | Who it covers | Utilization | How it is measured |
|---|---|---|---|
| SPI Research, 2026 Professional Services Maturity Benchmark | 509 professional services organizations worldwide, 2025 data | 66.4% | Billable utilization of the services workforce. The lowest in SPI's 19 years of data |
| SPI Research, 2025 Professional Services Maturity Benchmark | 403 firms in IT and management consulting, software, accounting, marketing and advertising, architecture and engineering | 68.9% | Billable utilization, which SPI described as below the 75% optimal threshold |
| Deltek, 47th Annual Clarity Architecture and Engineering Industry Study (2026) | 896 architecture and engineering firms in the US and Canada | Just under 60% | Firm-wide utilization, down from the previous year |
| Clio, 2025 Legal Trends Report | Aggregated data from tens of thousands of US legal professionals | 38% | Share of an eight-hour day spent on billable work, about 3 hours, so not comparable with the others |
Targets should differ by role, and SPI says so directly in its notes on billable utilization: senior consultants carry leadership and sales work that lowers their rate, while junior consultants may be expected to go above 80%. In the agency example, a single 75% target would brand the owner a failure and tell the designers they are fine at a level that is already wearing them out.
The same SPI piece explains where the familiar 75% comes from. It became the standard as a balance between billable work and the training, business development and internal operations every firm needs, and SPI's research has linked the 70 to 80% range with the best profitability. That is a range for a firm, not a quota to hand everyone.
Why is 100% billable utilization a warning sign?
Because a person at 100% has no time for anything the plan did not include, and something always turns up. SPI Research reports that firms running above 80% utilization see more burnout and attrition, and that the performance cost builds over time.
There is a practical problem too. With no slack, urgent client work has to push other client work back, proposals get written at night, and nobody has time to learn the next tool or tidy the processes that would make the work faster. A rate near 100% often also means the numbers are wrong: available hours set too low, or internal work logged against client projects as billable.
If total utilization stays near 100% for a whole team for months, the honest options are to hire, raise prices so the same hours earn more, or turn down work. Asking for a higher billable share from people who are already full is not on that list.
How do you track utilization each week?
Keep available hours in a spreadsheet, track billable and non-billable work, and calculate both utilization rates once a week. Compare the results with targets for each role.
- Set available hours: use one row per person per week, with contracted hours minus holidays and leave. Update it when someone books time off, not at the end of the month.
- Track all work: record client work and internal work in the same place, with the billable flag set at the time. Both are needed to calculate total utilization.
- Review each week: collect billable and non-billable hours per person for the week just finished, on the same day each week. Use a short weekly time review to correct entries before counting them.
- Read a four-week average: one full-day workshop swings a 40-hour week by 20 points. Four weeks shows the pattern.
- Compare against role targets: not against one number for everyone.
For a manual calculation, total your weekly billable hours across clients, with breaks and rates, then divide by available hours.
For ongoing tracking, Timen's summary report can group hours by person and then by billable status for any date range. It shows billable and non-billable hours, with each category's share of tracked time. Owners and admins see the whole team; members see only their own time. Timen is free with unlimited users. It does not store available hours, leave or capacity, or calculate utilization: keep available hours in your sheet and divide the reported hours yourself. See the time report filters for grouping options.
What else affects your utilization rate?
- How do you calculate billable utilization?
- Divide billable hours by available hours for the same person and period, then multiply by 100. Available hours are contracted hours minus public holidays, vacation and other leave. Someone with 152 available hours in a month who billed 125 of them ran at 82.2% billable utilization.
- What is a good utilization rate for an agency?
- For full-time delivery staff such as designers and developers, the 70 to 80% range that SPI Research links to the best profitability is a sensible target. Owners, account leads and project managers usually sit well below it, because selling and running the work is their job. A team average in the 60s is normal: SPI's 2026 benchmark put professional services firms at 66.4%.
- Should overtime count in a utilization rate?
- Include overtime in hours worked, but keep available hours at contracted time. Overtime can then push total utilization above 100%, making the extra workload visible.
- What is the difference between utilization and realization?
- Utilization is the share of available hours spent on billable work. Realization is the share of that billable work that actually ends up on an invoice, after write-offs and discounts. A team can have high utilization and still earn little if realization is low.
- Is utilization rate the same as capacity?
- No. Capacity is the number of hours a person or team has available. Billable utilization is the share of that capacity spent on billable work. Capacity planning looks forward; utilization measures what already happened.
What should you do with your utilization rate?
Compare utilization by role over four weeks, using contracted hours minus actual holidays and leave. Track billable and non-billable work together, and treat rates near 100% as a reason to review staffing. To decide who has room for new work, use capacity planning tools to look ahead.