Utilisation Rate
Utilisation rate is the percentage of an employee's or contractor's available hours that are billed to clients or allocated to billable projects. It's the primary profitability metric for agencies, consultancies, and professional services firms — and the metric that time tracking software exists to measure accurately.
The formula
Utilisation rate = Billable hours / Available hours × 100
Billable hours: hours logged to client projects or billable work Available hours: total working hours in the period (typically 8 hours × working days)
Example: An employee works 8 hours/day, 5 days/week = 40 available hours. They bill 30 hours to client projects. Utilisation = 30/40 = 75%.
Why it matters more than hours worked
Utilisation rate is the profitability signal. A team that works 40 hours/week but bills 20 is absorbing 20 hours of internal cost with no revenue. At £50/hour fully-loaded cost, that’s £1,000/week of unbilled labour per person.
For a 10-person agency at 70% utilisation (28 billable hours/week average): £50/hour × 28 hours × 10 people = £14,000 billable/week. At 80% utilisation: £16,000. That 10-point improvement is worth £2,000/week = £104,000/yr at no incremental cost.
This is why agencies buy time tracking software. Not to surveil employees. To understand where capacity is going and to price future engagements correctly.
Benchmarks by industry
| Industry | Typical target utilisation | High-performing |
|---|---|---|
| Management consulting | 75–80% | 85%+ |
| Agency (creative/digital) | 65–75% | 80%+ |
| Software development consultancy | 70–80% | 85%+ |
| Freelance (solo) | 60–70% | 75%+ |
| Legal (billable hours model) | 70–80% | 90%+ |
These are target rates, not actual rates. Most agencies without time tracking systems are running 15–20 points below target because unbilled time isn’t visible.
The non-billable floor
Some non-billable time is unavoidable and healthy:
- Business development / sales meetings
- Internal training and learning
- Admin and operations
- Team meetings
- Pitch work (pre-revenue)
A realistic non-billable floor is 20–25% of available hours. Setting a utilisation target above 80% is achievable for individual contributors but unsustainable if it requires eliminating all internal activities.
How time tracking tools measure utilisation
All major time tracking tools calculate utilisation once you define billable vs non-billable projects:
- Harvest: Native utilisation reports by person and team. One of the strongest utilisation dashboards in the category.
- Toggl Track: Available in Premium tier — project type (billable/non-billable) and user-level reports.
- Clockify: Billable hours report available on paid plans.
- Hubstaff: Utilisation reports available, including idle time segmentation.
- Timely: Automatic time categorisation feeds into utilisation reports without manual logging.
Billed vs billable
A subtle distinction relevant to agency finance: billable hours are hours you intend to bill. Billed hours are hours you actually invoiced. Scope creep, client relationships, and write-downs mean these often differ.
Agencies should track both: utilisation (are people doing billable work?) and billing realisation (of the billable hours, what percentage are actually invoiced?). The gap between the two is where revenue leaks.