BILLABLE HOURS CALCULATOR

For service companies, managing billable and non-billable time correctly is a foundational process. It answers essential questions for business owners, such as:

Accurate billable hours calculation helps you get the full picture of your agency’s productivity and time management.

Billable hours requirements and time tracking processes can vary significantly depending on your industry. For example, in a law firm, specific billable hours requirements need to be met. Minimum billable hours targets are set annually, and hours for lawyers are managed in a billable hours chart, usually through time increments.

Professional services usually face other challenges. Often, a project manager must ensure employees know how to track billable hours. For example, in a design agency, designers should factor in their brainstorming and R&D. Otherwise, if they opt to put in untracked overtime hours instead, you’ll be unable to get reliable estimations for future projects.

One of the main pitfalls agencies can fall into is overemphasizing their billable hour requirements. Client work is crucial to your agency’s sustainable growth, as it brings in profit that covers direct salary costs and growth initiatives. However, non-billable activities can be just as important. Non-billable hours can include administrative tasks such as client billing, pitching for new projects, entertaining clients and their requests, or building your employees’ skill sets.

The billable utilization rate is a key agency metric. According to The Wow Company’s 2023 Benchpress Report, the agency-wide average is around 65%. This varies across specific roles, with junior-level staff having the highest utilization (75%), and director roles having the lowest (33%). It’s important to keep your agency and employee context in mind when setting targets for utilization rates.

Ensuring a proper balance between billable vs non-billable time leads to increased employee satisfaction and better performance on individual projects. It ensures that your employees are not burned out and that you’re handling crucial day-to-day agency operations.

If you enjoyed our billable hours calculator, consider investing in billable hours software to automate the process. Using billable hours software to track time can help:

Productive can be your all-in-one tool for day-to-day agency management. It offers essential time-tracking features such as:

It is a qualitative and quantitative tool and customized interpretation of results intended for agency businesses to learn more about their billable metrics.

The calculator and all associated content derived from survey results is free of charge for any agency business that wants to participate.

Productive, an end-to-end agency management software, launched the calculator in 2024 to support agencies in their growth and profitability.

Productive treats any data submitted and processed safe and highly confidential.

No, the output generated by the calculator is intended to inform and assist you with your billable hours and utilization metrics as the input we ask for is only estimates of your average billable hours, labor cost etc. To get a strong grip over your agency’s utilization rate and profitability we suggest using a tool like Productive.