You see and hear it all the time, but what does it really mean?
Hours Billed to Clients / Employee Capacity = Billable Utilization
If your employees bill 32 hours of a 40-hour work week, their billable utilization rate is 80%. Most agencies will segment utilization rates by employee type because individual contributors will typically bill more to clients than managers or leaders who spend more non-billable time on people development and managing the business.
Billable Utilization can be found in Insights > Utilization > Advanced
% of time billed to clients + budgeted non-billable value-add initiatives = Productive Utilization
Building a new service offering or other intellectual property, doing pro bono work for a client, or deploying new internal tools (like Parallax to improve your services’ KPIs) are all examples of work that is “productive.” Filling out timesheets, attending internal meetings, and admin activities are examples of true non-billable, non-value-added time that tend to bloat services firms as they start to grow, but are usually still necessary to get done.
Looking for more on Billable and Productive Utilization? See where this Glossary article originated from, Why digital agencies should strive for 100% productive utilization