Utilization: a daily target, not a monthly ratio

The problem in services is not that people work too little. Everyone feels fully booked, all the time. The question is how much of that day ends up on an invoice.

The industry as a whole does not look good here. According to SPI Research’s annual benchmark, average billable utilization at professional services firms was 66.4% in 2025, the lowest since the survey began.¹ I think that has less to do with a lack of work than with how hours are recorded and managed.

Three ratios you need to keep apart

All three divide by the same base, available hours: contracted time minus public holidays, leave, sickness and training. What differs is the numerator.

Most planning tools show the first number. Your margin depends on the third.

Where the hours disappear

Between “billable” and “actually billed”, most hours vanish because time is recorded sloppily. Days at a service firm are extremely fragmented. You get interrupted a thousand times: a client calls, someone on the team has a quick question, an urgent bug comes in.

If you reconstruct your time in the evening, or on Friday, those fragments are exactly what you lose. The 15 minutes of advice on the phone never show up, because they sat between two larger blocks. At the end of the week the entry reads “Project X, 6 hours”, and nobody knows anymore whether any of it was billable.

That is why Leadtime lets you pause the running timer at any point and start a second one. When the phone rings, those 15 minutes run on their own timer for the client who is calling. Then you carry on with the first. It sounds like a detail, but this is exactly where the missing hours come from.

A target per day instead of a ratio per month

At some point we started giving our employees a target for billable time per day. For example: of 8 working hours, 4 should be billable. We built this concept into Leadtime as well. Everyone sees a time ring filling up during the day and can work toward hitting the target.

The difference from the monthly report is timing. A ratio that appears at month-end in the management meeting can no longer be influenced. A daily target is something every employee can still hit today. It combines two things: setting yourself a target and measuring constantly in real time. Together they work; either one alone does not.

Which target is the right one

85% billable time is absolutely worth aiming for in some roles, and not in others. A developer can reach 85% comfortably. For someone doing creative work, a target like that probably produces nonsense. It is pointless pressure, because the work does not function that way. The target has to fit the work.

For an IT services firm with 25 people, I recommend at least 50% billable time on average. You have to balance that figure against your own hourly rate. A worked example shows how closely the two are linked.

Below 50%, at this rate, a person barely earns more than they cost. Every point above it is contribution margin. With 25 people, a single percentage point is worth 420 hours a year, or about €46,000 in revenue at €110, from a team that is already there.

With 25 people, one point of billable time is worth about €46,000 a year.

Part of the gap is routine: collecting hours, filling in descriptions, writing invoices. Leadtime, the platform for IT service firms, agencies and consultancies, makes exactly that routine up to ten times faster. That is a model. You will find the method and can use your own numbers in the calculator.

Four numbers for the weekly meeting

What tells you most is the distance between two neighbouring numbers. If planned and logged drift apart, the plan is wrong. If billable and billed drift apart, money is being left on the table.

Frequently asked questions

Sources