Utilisation Rates Explained: What Agencies Should Actually Aim For

Utilisation is one of the most talked-about metrics in agency management, and one of the most misunderstood. At its simplest, it measures how much of a person’s available time is spent on billable client work.

The basic calculation is billable hours divided by available hours. If a designer is available for 35 hours in a week, after allowing for leave and public holidays, and logs 28 hours of billable client work, their utilisation for that week is 80%.

The details matter, though. Some agencies calculate utilisation against contracted hours, others against hours actually worked. Some count all client work, while others only count work that is actually invoiced. Some include time on client pitches as billable; most do not. None of these approaches is wrong, but mixing them, or changing definitions over time, makes the number meaningless. Before you set targets, agree on exactly how utilisation will be calculated across the agency and stick to it.

For most agencies, people’s time is the product. Salaries are usually the biggest cost in the business, and the only way to recover that cost is through work that clients pay for. Utilisation shows how effectively the agency is turning its capacity into revenue.

A small change in utilisation can have a big effect on profitability. If a team of twenty people each recovers a few more billable hours a week, the additional revenue over a year is significant, without any change in headcount or rates. Equally, if utilisation slips unnoticed, the agency can find itself paying for capacity it is not selling.

Utilisation is also a useful early warning signal for workload problems. Consistently high numbers may mean people are overstretched, while consistently low numbers may mean there is not enough work or that time is being absorbed by internal tasks.

Because it touches revenue, workload and wellbeing at the same time, utilisation is often the first number agency leaders look at when they want a quick read on the health of the business.

There is no universal target, but there are some widely used rules of thumb. Many agencies aim for somewhere in the range of 70% to 85% billable utilisation for delivery roles such as designers, developers and writers. Targets are typically lower for people with management, business development or leadership responsibilities.

A typical structure might look something like this:

• Delivery specialists: the highest targets, since most of their role is client work.
• Project and account managers: moderate targets, depending on how much of their time is billed to clients versus spent on internal coordination.
• Team leads and heads of department: lower targets to allow time for managing, mentoring and improving processes.
• Directors and leadership: the lowest targets, since much of their value lies in strategy, new business and running the agency.

Treat these as a starting point rather than a rule. The right targets for your agency depend on your pricing model, your service mix, how much of your work is retainer versus project-based and how you choose to bill for project management. Look at your own historical data, set realistic targets by role and adjust them as you learn.

It can be tempting to think that higher utilisation is always better. It is not. A team running at or near 100% has no room for anything else: no time for training, internal projects, process improvement, new business support or simply absorbing the unexpected.

And in agencies, the unexpected is constant. A client brings a deadline forward, a project needs an extra round of revisions, a colleague is off sick. When everyone is fully booked, each of these becomes a crisis, resolved with late nights and weekend work. Over time, that leads to burnout, mistakes and people leaving, which costs far more than the extra billable hours were ever worth.

Sustainable utilisation leaves a deliberate buffer. That buffer is not wasted time. It is what allows the agency to respond to change without breaking.

Pay attention to how the team experiences that buffer, too. People who regularly have a little breathing room are more likely to suggest improvements, help colleagues and bring fresh thinking to client work.

Utilisation is only useful if the data behind it is accurate. Watch for these common distortions:

• Incomplete timesheets. If people do not log all their time, utilisation will look lower than it really is, or higher if only billable time gets recorded.
• Time logged to the wrong place. Internal work logged against client projects inflates utilisation and distorts project budgets.
• Billable but not billed. Hours logged as billable but later written off make utilisation look healthier than the revenue suggests. Track both utilisation and realisation, the share of billable time that is actually invoiced.
• Averages that hide problems. An agency-wide average of 75% might hide one team at 95% and another at 55%. Always look at the breakdown by team and person.

Review the data regularly with team leads. They will often know the story behind an unusual number, such as a long-term leave, a project on hold or a new starter still ramping up, and that context is essential before drawing conclusions.

If utilisation is lower than it should be, the answer is rarely to push people harder. Instead, look at the causes:

• Reduce unnecessary internal time. Review recurring meetings, manual reporting and admin that could be simplified or automated.
• Improve resource planning. Gaps in schedules often come from poor visibility rather than a lack of work. A live view of capacity helps fill them.
• Balance skills and demand. If one discipline is consistently under-utilised while another is overloaded, consider cross-skilling or adjusting the team mix.
• Make time tracking easy. Better data alone often reveals that utilisation was higher than it looked.
• Bill for what you do. Make sure scope changes, extra revisions and project management time are captured and, where appropriate, invoiced.

Communicate targets carefully. Utilisation should be a shared measure of how well the agency is planning and pricing its work, not a stick for individual performance reviews. When people feel judged on a single number, they tend to manage the number rather than the work.

Utilisation is powerful, but it should never be read in isolation. High utilisation on unprofitable work is not a success, and a team can be fully booked on projects that are running over budget. Pair it with project margin, realisation and capacity forecasts to get the full picture, and keep an eye on team wellbeing at the same time.

Graysync tracks time, capacity and profitability in one place, so you can see utilisation by person, team and role alongside the budgets and margins it affects. With live data instead of month-end spreadsheets, you can spot problems early and set targets that keep the agency both profitable and sustainable.