A good utilisation rate for a solo consultant sits between 55 and 70% of your available hours. As you gain experience, implement systems and develop a referral pipeline, your utilisation rate will improve as you'll spend less time on business development and admin. If you're pushing past 80%, it usually means your pipeline is running dry, and you're in danger of losing billable hours to bench time.
How do you measure how "busy" you are as a solo consultant?
While looking at the number of clients you have is one method, it's also a vanity metric that doesn't provide hard data on your productivity and profitability.
A utilisation rate for consultants clears up any grey areas. You know exactly how many available working hours you have to bill clients, and how many non-billable hours you need to keep your business afloat.
When you combine your benchmarks with a time tracking tool, it's easy to see whether your calendar is converting into revenue or leaking profits.
Here's how to work out your utilisation rate, and what to do if yours is lower than it should be.
What is a utilisation rate for consultants?
A utilisation rate for consultants is the percentage of available working hours spent on billable client work.
To calculate it, you can use the following formula:
Utilisation Rate = (Billable Hours / Available Hours) x 100%
For a solo consultant working 200 days per year, that equates to 200 x 8 = 1,600 hours. If you only bill 1,200 hours, your utilisation rate is 75%.
You can take the calculation a step further and split it into billable utilisation and scheduled utilisation:
- Billable utilisation is the number of hours invoiced to clients divided by your total available hours. The answer gives you a profitability metric for your consultancy.
- Scheduled utilisation is the number of hours you have for billable and non-billable work divided by available hours. It's useful to run this calculation to understand your true capacity and how much work you can take on to prevent burnout.
What is a good utilisation rate for consultants?
A good utilisation rate for consultants is between 74-84%, but it's flexible depending on your seniority.
- Junior consultants (78%-88%): Usually sit with a higher billable proportion and deal with less business development and management tasks.
- Mid-level consultants (74%-84%): There is a bit more balance between billable and internal tasks.
- Senior consultants (55-70%): The drop in utilisation rate usually comes from more non-billable time spent on leadership or quality oversight tasks.
As a solo consultant, the range will also adjust. You're running the business with nobody underneath you to hand off tasks, which can make the standard 75-85% utilisation rate unrealistic.
Instead, a 55-70% target is more achievable for a one-person practice.
In your first year or two, you spend a lot of time building a pipeline and systems. A good chunk of non-billable time goes into marketing and writing proposals. When it comes down to the actual work, your work efficiency wouldn't be on the same level as a consultant with three to five years under their belt.
As you grow into an established solo consultant with a referral-based pipeline and automated systems, less of your week is spent winning new work and staying on top of admin.
However, if you consistently hit above 80%, that's a warning sign. It means you don't have much slack for the next proposal, and your pipeline is in danger of running dry the moment a project ends.
How a low utilisation rate erodes your margin
Besides serving as a useful productivity statistic, your utilisation rate also provides insight into your income.
Let's say you're a solo consultant billing $125 per hour and you have 40 hours available each week across 48 weeks in a year. That would leave you with 1,920 available hours.
| Utilisation rate | Billable hours/year | Revenue at $125/hr |
|---|---|---|
| 50% | 960 | $120,000 |
| 65% | 1,248 | $156,000 |
| 75% | 1,440 | $180,000 |
Improving your utilisation rate from 50% to 65% brings in an additional $36,000 to your business without increasing your rate or adding new clients. All that's changing is that you're billing more hours.
Once you're an established consultant, chasing a better utilisation rate often makes more sense financially than a 15% rate increase.
See where your billable hours are actually going
Kiaro tracks time against every project and shows you what you billed versus what you had available, so utilisation is a number you can read rather than one you estimate at year end. Free, no credit card.
What affects your utilisation rate, and how to raise it
There are a handful of things that pull down your utilisation rate as a consultant. Some of the biggest culprits are:
- Bench time: The gap between one project ending and the next one starting. If you have a two-week gap each quarter, it equates to eight weeks of lost billable time.
- Unbilled admin: Spending time chasing invoices, reconciling expenses, creating proposals, etc. None of the admin you need to do to run your business goes onto a client's bill.
- Incorrect time-tracking: Using a time-tracker that doesn't let you set increment rules or not tracking a task at all adds up quickly.
- Scope creep: Extra revisions, "one more thing", and unbilled calls eat into project profit margins and your billable time.
When you add all of these small things up, that's usually the cause of a poor utilisation rate.
However, the fix isn't working more hours. It's capturing and converting the hours clients are already paying you for:
- Track your time: Don't rely on memory. Use a time-tracker designed for how consultants bill.
- Create an SOW document: A statement of work outlines what is billable, milestone timelines, the procedure for submitting a change request, and the cost of extra work.
- Automate your admin: Investing in business management software for consultants saves time on ad hoc tasks. The right tool can automatically chase late invoices, include proposal templates, and seamlessly add billable time to invoices without requiring a manual export.
Read more: Quiet Scope Creep Fixes for Consultants on Retainers
Understand how much money is not making it into your invoice
Want to see exactly where your hours are going before you change anything?
Start with our rate calculator.
Plug in the take-home pay you want, number of billable hours, how many weeks you work per year, expenses and tax, and you'll get the billable hourly rate you should be charging.
The calculator also shows the utilisation rate implied by the hours you entered, so you can see the share of your week you are actually billing for.
Once you understand whether your rate is helping or hurting your business profitability, you can start looking at how you work and what needs to change to fix your utilisation rate.
Frequently asked questions
What is a good utilisation rate for a beginner consultant?
A good utilisation rate for solo consultants is between 50 and 60% for the first two years. You're spending more of your week on marketing and proposals than you will once you have a referral pipeline, so a lower rate here isn't a sign you're behind.
What tools help improve a consultant's utilisation rate?
Time tracking software with the ability to bill time incrementally and automatically flow entries into invoices. Beyond that, a business management tool for consultants like Kiaro that automates invoicing and reduces the admin that eats into available hours.
Is 90% utilisation a good sign for a solo consultant?
No. At that level, you have almost no time for proposals or business development, so the moment a project ends, you've got nothing lined up to replace it. It's a sign you're underpriced and compensating with volume.