Agency & Pricing
Billable Utilization Calculator
Utilization tells you how much of the time you pay for actually gets sold. Realization tells you how much of what you sold actually got paid. Agencies that only track the first one keep wondering where the revenue went.
Result
FormulaUtilization = (billable hours ÷ available hours) × 100. Realization = (invoiced hours ÷ billable hours) × 100.
Worked example
1,250 billable hours out of 1,880 available is 66.5 percent utilization. Only 1,120 of those got invoiced, a 89.6 percent realization rate, producing $207,200 of revenue at $185 an hour. Every point of utilization on this cost base is worth $3,478.
What to watch for
Target 70 to 75 percent utilization for delivery staff. Consistently above 85 percent looks great in a spreadsheet and produces resignations, because there is no slack left for the weeks that go wrong.
The realization gap is where write-offs, scope absorbed for goodwill, and unbilled overruns hide. A 90 percent realization rate on a large team is tens of thousands of dollars a year of work you gave away without deciding to.
Do not chase utilization by pushing strategists and leads onto delivery work. Their non-billable hours generate the pipeline, and starving that to hit a utilization target is borrowing from next quarter.
Frequently asked questions
What counts as available hours?
Working hours after holiday, vacation, and statutory leave. Counting a full 2,080 hour year inflates the denominator and makes a healthy team look idle. I use roughly 1,850 to 1,900 as a working figure.
Is high utilization always good?
No. Above about 85 percent sustained, quality drops, internal improvement work stops entirely, and turnover rises. The cost of replacing a senior delivery person dwarfs the revenue you gained from squeezing them.
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This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.