How to use the billable utilization calculator
- Add a row for each period you want to count, such as a week or a month.
- Enter the hours worked (all work time) and the billable hours (time you can bill clients) for each period.
- Optionally set a utilization target and your hourly rate to see the gap and the value of unbilled hours.
- Read the overall utilization and the figure for each period.
Formula
Utilization = billable hours / hours worked x 100%
Non-billable hours = hours worked - billable hours
Billable hours at a target = hours worked x target % / 100
Value of unbilled hours = non-billable hours x hourly rate
Totals are added across all periods before dividing, so longer periods count for more than shorter ones.
Four weeks of freelance work
Week 1 has 26 billable hours of 40 worked, which is 65%. Weeks 2 to 4 have 28 of 38, 25 of 42 and 30 of 40 billable. Across the four weeks that is 109 billable hours out of 160 worked, a utilization of 68.13%, and 51 non-billable hours.
At a 70% target you would bill 112 hours, so you are 3 hours below it. If your rate is $80 an hour, the 51 non-billable hours are worth $4,080 at that rate. The target is an example. Set your own.
What counts as worked time
Utilization depends on what you count as hours worked. Some people include admin, sales calls, learning and bookkeeping, while others count only client work. The figure only makes sense if you use the same rule every period.
Non-billable time is not wasted time. Finding clients, sending invoices and improving your skills are part of running the business, and your rates need to cover them.
Using the result
A lower or higher figure is not good or bad by itself. It depends on your type of work, how you price it and how much time you want to spend on the rest. Use it to notice trends in your own numbers.
When you set rates, the freelance rate calculator uses a billable share as an input, and the income goal calculator works backward from what you want to earn. For retainer pricing see the retainer fee calculator.
Assumptions and limits
- Hours worked includes all work time, billable or not.
- Billable hours cannot be more than hours worked in the same period.
- The target and hourly rate are values you choose and are examples.
- Revenue, tax and unpaid time off are not modeled.
Frequently asked questions
How do you calculate billable utilization?
Divide billable hours by total hours worked and multiply by 100. With 109 billable hours out of 160, utilization is 68.13%.
What is a good utilization rate?
That depends on your work, how you price it and your goals, so no single figure is right. Set a target that fits your business and compare it with your own history.
Should I count admin time as hours worked?
Many people do, because it is time the business needs. The important thing is to use the same rule in every period so the numbers can be compared.
Why can billable hours not exceed hours worked?
Billable time is part of the time you worked, so it cannot be larger. If the entry looks wrong, check whether the worked column includes all your hours.