Which metric measures the percentage of total available hours that are billable to clients?

• A. Utilization rate
• B. Overhead rate
• C. Break-even rate
• D. Net revenue per employee

Answer: (A)

This metric captures how much of a firm’s available time is actually spent on work billed to clients. It’s the share of billable hours relative to total hours that a person or team has available, shown as a percentage. When this utilization rate is high, most of the time is being used for revenue-generating activities; when it’s low, a larger portion goes to non-billable tasks like internal meetings, administration, or training.

Calculation is straightforward: billable hours divided by total available hours, then multiply by 100. For example, if someone has 1,800 available hours in a period and logs 1,350 billable hours, the utilization rate is 75%.

This metric is distinct from overhead rate (which relates indirect costs to labor hours), break-even rate (the billing rate needed to cover all costs), and net revenue per employee (revenue after direct costs per employee).