utilization rate
The share of an agency employee's working time that is billable to clients.
Definition
Utilization rate measures how much of paid working time is spent on client work that can be charged. If a person works forty hours and bills twenty-eight, utilization is seventy percent. Agencies track it to manage profitability and staffing. Very high targets can leave no room for training, internal projects and thinking, while low rates signal overcapacity. For clients, understanding it helps explain why hourly rates are higher than salaries: rates must cover idle time, overhead and profit. When comparing fee proposals, ask how many hours the team plans to spend on your work and by which roles, not just the total price.
In a sentence
The agency tracked utilization to decide when to hire.
Hourly rates reflect overhead and non-billable time as well as salaries.
