Definition
What is utilization rate?
Utilization rate is the percentage of an employee's available working hours that are spent on billable client work. It is calculated by dividing billable hours by total available hours and multiplying by 100. It is a core productivity metric for service firms, showing how much of the team's paid time is actually earning revenue rather than going to internal or idle work.
Formula
Utilization rate = (Billable hours / Total available hours) x 100
How to calculate utilization rate
Utilization rate compares billable hours against the hours a person was available to work. Available hours usually means scheduled or contracted working hours for the period, before deducting billable time.
For example, if an employee is available for 160 hours in a month and logs 120 billable hours, their utilization rate is 120 divided by 160, which is 0.75, or 75 percent.
Billable, non-billable, and available hours
The number depends on how you define each part of the formula, so be consistent:
- Billable hours are time logged against client work that can be charged
- Non-billable hours are real work that is not charged, such as internal meetings, admin, training, or sales
- Available hours are the scheduled working hours in the period
What counts as a healthy utilization rate
There is no single correct target, because it depends on role and business model. Delivery staff are often expected to run higher utilization than people who also carry sales, management, or overhead responsibilities. Very high utilization can signal an overloaded team with no slack, while very low utilization points to idle capacity or too much unbilled work. The right level balances revenue against sustainable workload.
How this works in Belvak
When team members log hours against their projects in Belvak, those hours can be compared with the time each employee was expected to work. That comparison is the basis of utilization, and it feeds the labor cost and margin view so you can see whether billable time is translating into profitable delivery.
FAQ
Frequently asked questions
How do you calculate utilization rate?
Divide billable hours by total available hours, then multiply by 100. If someone is available for 160 hours and logs 120 billable hours, their utilization rate is 75 percent.
What is a good utilization rate?
There is no universal target. It varies by role and business model. Delivery staff typically run higher utilization than people who also handle sales or management. The right level balances revenue with a sustainable workload.
What is the difference between billable and non-billable hours?
Billable hours are time charged to client work. Non-billable hours are real work that is not charged, such as internal meetings, admin, training, or business development.