A billable hours calculator takes the hours you charged clients, the hours you were available, your hourly rate and your cost per hour, and turns them into four numbers: utilization rate, effective hourly rate, revenue and margin. Those four show whether the hours a person or a team worked this month made money, and by how much.
What is utilization rate
Utilization rate is the share of available hours that were billed. Divide billable hours by available hours. If someone billed 120 hours in a month where they were at work for 160, their utilization rate is 75 percent. The cost of all 160 hours is paid either way, so this one number decides most of the margin.
Available hours are the hours a person was at work, not the hours in the month. Take contracted hours and subtract holidays, sick days and training. For one full-time person, 160 hours is a common month; over a year, 1,700 to 1,800 after leave.
Billable vs non billable hours
Billable hours are hours a client is charged for. Non billable hours are everything else the person did at work: internal meetings, selling, admin, training, and fixing things that were not in scope. Both are real work. The distinction is who pays for the hour.
Some non billable time is necessary. Nobody sells, learns or plans on a client's clock. The problem is the non billable time that should have been billable: work done for a client and never invoiced.
Unbilled hours and unbilled work
Unbilled hours are hours worked for a client that never reached an invoice. Unbilled work is the same thing seen from the deliverable: the extra page, the third round of revisions, the weekly call nobody logged. The calculator shows unbilled hours as the gap between available and billable, which includes the necessary non billable time as well. To find the part that should have been invoiced, compare hours logged against a client with hours on that client's invoices. The scope creep guide covers what to do about it.
How to read the four results
Utilization rate is the share of hours billed. For people whose job is client work, 70 to 80 percent is the range agency owners commonly quote as a target. Effective hourly rate is revenue divided by every available hour, billed or not; it is what the person actually earned per hour of being at work, and it falls with utilization. Revenue is billable hours times the rate. Margin is revenue minus the cost of all the available hours, shown as an amount and as a share of revenue.
Use the same card as a utilization rate calculator for a whole team by entering the team's totals, and as a capacity check by entering the hours you could sell: the revenue line is what those hours are worth at your rate. The client profitability guide takes the cost per hour from here and applies it per client.
Where the numbers come from
Billable and available hours come from time tracking, a timer or a weekly timesheet. The rate comes from your rate card. The cost per hour is salary plus employer taxes, benefits and a share of overhead, divided by available hours for the same period. Revenue should match what was invoiced; if it does not, the difference is unbilled work. Spodus holds the invoices per client, so the invoiced side is one filter away.
