Employee utilization rate is the share of a person's available working hours spent on billable or productive work. The formula is billable hours divided by available hours, multiplied by 100. In SPI Research's 2026 benchmark, average billable utilization across professional services firms was 66.4%, against a level of about 75% that SPI considers healthy.
Key takeaways
- Utilization = billable hours ÷ available hours × 100.
- How you define available hours changes the answer, so define it once and keep it.
- The industry average fell to a record low in 2025.
- Very high utilization is a warning sign, not a goal.
What is the utilization rate formula?
Utilization rate = billable hours ÷ available hours × 100
A consultant who bills 30 hours in a 40-hour week has a utilization rate of 75%.
Three versions are in common use.
| Measure | Formula | Use it to |
|---|---|---|
| Billable utilization | Billable hours ÷ available hours | Judge revenue-generating time |
| Resource utilization | Billable and productive non-billable hours ÷ available hours | Judge how fully people are occupied |
| Target utilization | The rate a role is expected to reach | Plan capacity and set prices |
What counts as available hours?
This is where firms disagree, and where comparisons go wrong.
- Gross method. Use all paid hours: 2,080 a year for a full-time employee.
- Net method. Subtract holidays and leave first.
A worked example for one year:
| Hours | |
|---|---|
| Paid hours, 40 × 52 | 2,080 |
| 10 public holidays | minus 80 |
| 15 days of leave | minus 120 |
| Available hours | 1,880 |
| Billable hours recorded | 1,410 |
On the net method, utilization is 1,410 ÷ 1,880 = 75%. On the gross method, the same person scores 1,410 ÷ 2,080 = 67.8%. Neither is wrong. Mixing them is.
What is a good utilization rate?
Average billable utilization across professional services firms in 2025, down from 68.9% a year earlier and the lowest figure in the survey's history, according to SPI Research's 2026 benchmark as reported by Deltek.
SPI Research treats about 75% as the healthy level for a professional services organization. Its 2026 report is based on a survey of 509 firms.
Targets vary by role. Delivery staff carry the highest targets, managers lower ones and senior leaders the lowest, because more of their time goes to sales, hiring and management.
Is higher utilization always better?
No. Above a certain point, utilization buys revenue this quarter at the expense of next year.
No slack
A team at 95% cannot absorb an urgent request or a sick day.
No investment
Training, process improvement and sales all live in non-billable time.
Burnout
Sustained overload leads to mistakes and resignations.
A rate that is persistently above target says you need to hire. One that is persistently below says you need work, or better time capture.
How do you improve utilization?
Capture all billable time
Unrecorded work depresses the number before anything else does. See How to track billable hours.
Cut administrative load
Every hour of timesheet entry, status reporting and chasing is non-billable.
Plan assignments ahead
Gaps between projects are the largest avoidable loss.
Control scope
Unbilled extras lower utilization and margin together.
Balance the team
One person at 95% and another at 50% is a scheduling problem, not a performance problem.
How do you calculate utilization for a team?
Add up the team's billable hours and divide by the team's total available hours. Do not average individual percentages, because part-time staff would distort the result.
Example: three people have 160, 160 and 80 available hours in a month and bill 128, 112 and 56. Team utilization is 296 ÷ 400 = 74%.
How does BirdsEye help you track utilization?
Utilization needs two inputs: hours by project and hours available. BirdsEye records both sides. Tracked time is attributed to projects and tasks automatically as people work, and attendance and approved leave are recorded day by day.
Export time entries as CSV, mark which projects are client work, and the formula above is a single division. BirdsEye does not label hours as billable or calculate a utilization figure for you, so that last step happens in your spreadsheet or reporting tool. See the features.
Frequently asked questions
What is a good utilization rate?
SPI Research regards about 75% billable utilization as healthy for a professional services firm. The industry average in 2025 was 66.4%. Appropriate targets differ by role.
What is the difference between utilization and productivity?
Utilization measures how much available time goes to billable work. Productivity measures output for a given input. A person can be highly utilized and unproductive, or the reverse.
What is the difference between utilization and realization?
Utilization compares billable hours worked with available hours. Realization compares hours actually invoiced with billable hours worked. Write-downs lower realization.
How do you calculate utilization rate in Excel?
Divide billable hours by available hours and format the result as a percentage. With billable hours in cell B2 and available hours in C2, the formula is =B2/C2.