Everhour tracks time off alongside work hours, giving services teams cleaner inputs for utilization calculations.
Measure billable utilization against total capacity and see exactly how many hours you're leaving on the table each period.
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The utilization rate formula answers one practical question: what share of a person's available working time became billable client work? In services businesses, the numerator is billable hours. The denominator is the available-hour base you choose and label. That base can be gross capacity, working hours after PTO and holidays, or total logged hours, and each version answers a different management question.
For U.S. teams, full-time capacity is employer-defined because the FLSA does not define full-time or part-time employment. Many firms still use 40 hours as a gross weekly baseline because federal overtime rules require covered nonexempt employees to receive overtime pay for hours worked over 40 in a fixed 168-hour workweek. A 40-hour week equals 2,080 gross annual hours before company PTO, holidays, unpaid leave, or other absences.
Use this formula: utilization rate = billable hours ÷ available hours × 100. If a consultant has 99 billable hours in a month and 132 available hours after approved leave and holidays, the utilization rate is 75%. At a $145 standard billing rate, those 99 billable hours carry $14,355 of standard billable value before discounts, write-downs, or invoice adjustments.
The same data also shows the effective value of the full available-hour base. Divide $14,355 by 132 available hours, and the effective value is $108.75 per available hour. This second number does not replace utilization. It connects the utilization percentage to revenue capacity, which helps managers see the cost of non-billable time, underfilled schedules, and misclassified work.
The denominator controls the answer. A person with 99 billable hours has 75% utilization against 132 net available hours, but 61.88% utilization against 160 gross monthly capacity. Neither figure is automatically wrong. The first measures billable work against actual availability after approved absence. The second measures billable work against the full capacity plan before leave and holidays.
Paid vacation and holidays are policy inputs for U.S. private employers, not federal denominator entitlements. The FLSA does not require payment for time not worked, including vacations, sick leave, or holidays. OPM lists 11 federal holidays in 2026 for federal employees, while private-sector paid holidays depend on employer policy unless another law or contract applies. Label the denominator so readers know exactly what the percentage means.
A one-off calculation is enough when you need a quick check for one person, one project, or one month. Enter billable hours, choose the denominator, and read the percentage. This works for spot checks, proposal planning, or a simple back-of-the-envelope comparison between client work and available time.
A managed workflow becomes necessary when utilization feeds staffing, billing, payroll review, or performance reporting. Teams need consistent time capture, billable versus non-billable classification, approved time off, and reporting by person, role, team, or project. Everhour Time Off tracks vacations, sick leave, custom leave types, partial-day durations, accrual, carryover, and approved requests so absence data flows into timesheets and utilization inputs over time.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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The standard formula is billable hours ÷ available hours × 100. The numerator is time charged to client work. The denominator must be named: gross capacity, net working hours after PTO and holidays, or total logged hours. A 90-hour billable month divided by 120 net available hours equals 75% utilization.
The denominator defines the capacity being tested. Gross capacity includes the full work schedule before absences. Net working hours subtract approved PTO, holidays, unpaid leave, and similar absences. Total logged hours measures billable work against recorded work only. The same billable hours produce different percentages because each denominator answers a different business question.
There is no statutory U.S. utilization target. Federal sources define work-hour and leave rules, but they do not set a professional-services utilization benchmark. A firm sets targets by role, service line, seniority, or industry benchmark. Delivery roles usually carry higher utilization expectations than managers who split time across sales, training, administration, and staffing.
Paid leave hours belong in available hours only when the firm uses a gross capacity denominator. They are excluded when the firm uses a net-working-hours denominator. OECD annual hours actually worked exclude time not worked because of public holidays, annual paid leave, illness, maternity or parental leave, and similar absences.
Utilization and realization measure different things. Utilization measures billable hours divided by available hours. Realization measures billed or collectible value against standard billable value. A person can have high utilization and low realization if many billable hours get discounted, written down, capped by a fixed fee, or excluded from the final invoice.
Everhour Time Off tracks vacations, sick leave, holidays, and custom leave types with partial-day durations, accrual, carryover, and per-employee balances. Approved time-off data flows into timesheets and reports, so managers can calculate utilization against a cleaner net-working-hours denominator instead of manually removing absences later.
Everhour Reporting lets teams build reports with billable time, member, project, client, budget, cost, and metadata columns. Managers can group and filter logged time by person, project, or period, then export CSV, XLSX, or PDF files for utilization review and capacity planning.
Track approved time off, billable work, and team availability in one workflow. Everhour Time Off keeps absence data connected to timesheets, giving utilization reports a cleaner capacity baseline.
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