Definition
What is Utilization Rate?
The share of available working hours that is billable to clients.
Utilization rate measures how much of a team’s capacity converts into billable work. It is the central profitability lever for agencies and consultancies: revenue is effectively hourly rate × billable hours, so low utilization silently destroys margin even when rates look healthy. Agencies commonly target 70–80% for delivery roles.
Formula
Utilization (%) = Billable Hours ÷ Available Hours × 100Example
A consultant with 160 available hours bills 112 of them: utilization = 112 ÷ 160 = 70%.