Last updated November 6, 2026
Billable hours are a count: the hours you can charge to clients. Utilisation is a ratio: those hours divided by the hours the person was available to work. You need both, because 96 billable hours is a strong month for a part-timer and an ordinary one for a full-timer.
What is the difference between utilisation and billable hours?
Utilisation and billable hours answer different questions, and a third measure, realisation, answers the one owners usually care about most.
| Measure | How it's worked out | The question it answers |
|---|---|---|
| Billable hours | Add up the hours chargeable to clients | How much client work got done? |
| Utilisation | Billable hours ÷ available hours | How much of the time we had went on client work? |
| Realisation | Amount billed ÷ standard value of those hours | How much of that work did we actually charge for? |
If you haven't yet settled what counts as billable, start with the guide to billable and non-billable hours. All three measures depend on it.
How do you calculate utilisation?
Calculate utilisation by dividing a person's billable hours by their available hours for the same period, then multiplying by 100. The billable figure is rarely in dispute. The argument is about what counts as available.
Here's an invented example. A consultant on a 37.5-hour week has a month with 21 working days, which is 157.5 contract hours. One public holiday and three days of leave take off 30 hours. The consultant bills 102 hours.
| Available hours defined as | Hours | Utilisation |
|---|---|---|
| All contract hours | 157.5 | 64.8% |
| Contract hours less leave and public holidays | 127.5 | 80.0% |
That's the same person in the same month, with a 15-point gap. Neither figure is wrong. The second is fairer for judging a person, since nobody should look idle for taking their holiday. The first shows what a whole year of paid hours produced. Pick one, write it down and never compare figures calculated on different definitions, which is also why you should treat published benchmarks with care.
Why can the same billable hours mean different things?
The same billable hours can mean different things because they say nothing about how many hours were available. These three invented people each billed 96 hours in a month.
| Person | Available hours | Billable hours | Utilisation |
|---|---|---|---|
| Full-time | 150.0 | 96 | 64.0% |
| Part-time, four days a week | 120.0 | 96 | 80.0% |
| Full-time, with a week's leave | 112.5 | 96 | 85.3% |
A league table of billable hours ranks them equal. It's also true the other way round: the same utilisation can hide very different money. These two consultants both logged 120 billable hours out of 150 available, at a €100 rate.
| Consultant A | Consultant B | |
|---|---|---|
| Billable hours logged | 120 | 120 |
| Utilisation | 80% | 80% |
| Hours on the invoice | 120 | 96 |
| Amount billed | €12,000 | €9,600 |
| Realisation | 100% | 80% |
Consultant B's 24 missing hours were written down before billing. Utilisation doesn't see them, so a firm tracking only utilisation would rate these two the same, €2,400 apart.
What utilisation target should a firm set?
A firm should work out its utilisation target from its own costs, because a benchmark from another firm reflects that firm's rates and staff mix. Here's an invented example for one consultant, charged at €90 an hour with a target margin of 20%.
| Step | Sum | Result |
|---|---|---|
| Annual cost: pay, employer taxes and a share of overheads | €78,000 | |
| Available hours: 1,950 paid, less 40 days of leave, holidays and sickness | 1,950 − 300 | 1,650 |
| Billable hours to break even | €78,000 ÷ €90 | 867 |
| Break-even utilisation | 867 ÷ 1,650 | 52.5% |
| Revenue needed for a 20% margin | €78,000 ÷ 0.80 | €97,500 |
| Billable hours needed | €97,500 ÷ €90 | 1,083 |
| Target utilisation | 1,083 ÷ 1,650 | 65.6% |
Then test it against what really happens. If the firm typically bills only 90% of standard value, the effective rate is €81, the hours needed rise to 1,204 and the target climbs to 73.0%. If it raises the rate to €100 instead, the target falls to 59.1%.
Those three figures make the case that utilisation is only one of the levers. The rate and the write-downs move the same sum, and the guide to calculating a charge-out rate covers the other side of it.
When does a utilisation target backfire?
A utilisation target backfires when people can hit it by logging time rather than by doing more useful work. Watch for these:
- Padding. Hours get logged as billable and then written down at billing. Utilisation rises while realisation falls, which is why you read the two together.
- One target for everyone. An owner who sells and manages can't match someone who only does client work. Set targets by role.
- No slack. Someone at 100% has no hours for training, for proposals or for a client's urgent request. The plan for that person's next few weeks belongs in a capacity plan, and it should leave room.
- Reading one month as a verdict. A quiet month may be a sales problem rather than that person's. Look at the trend across a quarter.
Measuring utilisation alongside ERPFlow
ERPFlow doesn't calculate utilisation. It has no utilisation or capacity reports, so the formulas above stay in your spreadsheet. It also doesn't have a timer or timesheets today. Time tracking, including converting tracked time into invoices, is coming soon, which covers logging and billing time and not utilisation reporting.
ERPFlow can supply some of the inputs:
- Deductions from available hours: Vacations has a team calendar, one row per person for the month, with absences as bars and public holidays hatched.
- The cost of a person: a staff record's Salary section holds the hourly rate and monthly hours, as gross pay plus employer taxes. Only roles allowed to see salaries can read it.
- Hours by project: project cards hold typed time spent, totalled per project and per customer, though never per person.
- The whole firm's result: the dashboard's Profitability card sets revenue and other income against expenses, salaries and bonuses. It covers the entire business, so it won't tell you anything about one person.