Glossary
Utilization rate
The percentage of an employee's or team's total available working hours that are spent on billable client work, as opposed to internal, administrative, or unbilled time.
The percentage of an employee's or team's total available working hours that are spent on billable client work, as opposed to internal, administrative, or unbilled time.
Example
A designer works 160 hours in a month and logs 128 billable hours, for an 80% utilization rate — the remaining 20% went to internal meetings, training, and business development.
Why it matters for agencies
Utilization rate measures how much of a team's time is going to client work at all; realization rate then measures how much of that client-facing time is actually being captured as revenue. A team can have high utilization but low realization if a lot of their billable-looking hours are unbilled scope creep.