Billable Utilisation Rate for Agencies and Consultants

Short answer: billable utilisation is the share of a person's available hours spent on work you can bill: billable hours ÷ available hours × 100. There is no single right number. A designer or developer who mostly delivers client work can sustain a much higher figure than a project manager or a founder who also sells. What matters is that your hourly rate is built on the utilisation you actually achieve, not the one you hope for.

The formula

Utilisation % = Billable hours ÷ Available hours × 100

• Available hours = working days × hours per day, minus leave and holidays. A month of 22 working days at 8 hours is 176; with two days of leave, 160.
• Billable hours = hours spent on work a client pays for, whether billed by the hour or covered by a fixed fee or retainer.

Some firms use total contracted hours instead of available hours, which makes utilisation look lower in leave-heavy months. Either works if you are consistent.

What counts as billable

Decide this once and write it down, or every person will log differently:

• Billable: design, development, writing, testing, client calls about the work, revisions within scope, and reporting the contract includes.
• Billable if the contract says so: project management, travel time, internal reviews of client work.
• Not billable: sales calls and proposals, internal meetings, training, hiring, your own website and marketing, and rework caused by your own mistakes.

Fixed-fee and retainer work is still billable time even though no one sends an hourly invoice. Log it; that is how you find out whether the fixed fee was right.

Utilisation is not realisation

Utilisation measures time spent on billable work. Realisation measures how much of that time turned into money: hours billed at full rate ÷ billable hours worked. A team at 80% utilisation that writes off a third of its hours on fixed-fee overruns is doing worse than a team at 65% that bills everything. Track both.

Realistic targets, by role

You will see "industry benchmarks" quoted with no source. Treat them with caution. A target should come from what the role is for:

Role	Reasonable range	Why
Designer, developer, writer (delivery)	65–80%	Most of the day is client work, but internal meetings, learning, reviews and small admin take a real share. Above about 85% for months on end usually means unlogged overtime or burnout.
Senior specialist or team lead	50–65%	Part of the job is reviewing others' work and mentoring, which is usually not billed.
Project or account manager	30–55%	Depends on whether client communication is billed. If your retainers include account management, more of it counts.
Founder or partner	15–40%	Sales, hiring, finance and firefighting are the job. A founder at 80% utilisation is usually a business with no one selling.

These ranges are a starting point for your own numbers, not a standard. Measure three months, then set targets per person from what you see.

A worked example

A five-person agency, October, 160 available hours each:

Person	Billable hours	Utilisation
Designer	118	73.8%
Developer 1	124	77.5%
Developer 2	96	60.0%
Project manager	64	40.0%
Founder	40	25.0%
Team	442 of 800	55.3%

Developer 2 at 60% is the line to look at first. It may be a gap in the pipeline, a person stuck on internal work, or hours not being logged. Each needs a different fix.

How utilisation sets your price

Every rupee of cost has to be recovered from billable hours. So:

Cost per billable hour = monthly cost of the person (salary + overhead share) ÷ billable hours

Take a developer costing ₹70,000 a month, plus ₹20,000 of rent, software and admin allocated to them, so ₹90,000.

Utilisation	Billable hours (of 160)	Cost per billable hour (₹)
50%	80	1,125
60%	96	938
75%	120	750

If you price assuming 75% and achieve 60%, every hour you sell costs ₹188 more than you thought. Add your target margin on top of the realistic cost — see markup vs margin for the arithmetic — and the rate you need is often higher than the one on your rate card.

Measuring it without a heavy system

1. Everyone logs time daily against a project, or against an "internal" bucket, marking each entry billable or not.
2. At month end, total billable hours per person and divide by their available hours.
3. Look at three numbers per person: utilisation, the trend over three months, and realisation on their projects.
4. Discuss the outliers in a short monthly review. Do not publish a ranking; it encourages padding timesheets.

The first month's figures will look worse than you expected. That is usually the logging becoming honest, not the team getting slower.

Raising utilisation the right way

• Log time daily. Weekly reconstruction undercounts by a wide margin. See timesheets that get billed.
• Bill what you can. Client calls, revisions and reporting are often billable under the contract but never logged as such.
• Protect delivery people from internal work that someone else can do.
• Fix the pipeline, not the person, when a whole team's utilisation dips.

Watch realisation at the same time: pushing utilisation up while scope creep goes unbilled just moves the loss. And do not chase utilisation by cutting the non-billable work that keeps the business alive — sales, hiring and training. A team at 85% this quarter with an empty pipeline is at 40% next quarter.

Where Grovia fits

In Grovia, time is logged against a project and task, and each entry is marked billable or not. A project's profitability tab shows total and billable hours next to the amount invoiced, labour cost worked out from salaries, and project expenses. Grovia's team page also shows each person's hours against expected hours, which is a measure of time logged rather than billable utilisation. To get the utilisation figure in this post, compare billable hours with available hours. See the projects module.

Grovia runs projects, timesheets and profitability alongside leads, quotations, GST invoices, payments and your team in one place. Start a free 14-day trial (no card needed).

Frequently Asked Questions

How do you calculate billable utilisation?

Divide billable hours by available hours and multiply by 100. Available hours are working hours in the period minus leave and holidays.

What is a good utilisation rate for an agency?

It depends on the role. Delivery staff can often sustain 65–80%, managers far less, and founders less still. Set targets from your own three-month data.

What is the difference between utilisation and realisation?

Utilisation is the share of time spent on billable work. Realisation is the share of that billable time actually billed and paid at full rate.

How does utilisation affect pricing?

Lower utilisation means each billable hour has to recover more cost, so the hourly rate you need goes up.