How To Use Kantata’s Utilization and Revenue Calculator

Is your business falling short of its revenue goals?

Kantata’s Resource Utilization and Revenue Calculator is a tool designed to help businesses and individuals estimate the impact that improvements in utilization rates could have on their revenue. In the world of professional services, these two factors are tightly intertwined, with utilization rates directly effecting how much money a business can truly make in a year.

By using this calculator, you can gain insights into your business’s financial performance and identify areas for improvement. The following are four easy-to-follow steps for using Kantata’s online tool and understanding where fast, effective improvements can be made that can quickly impact your business’ bottom line.

Step 1: Enter Number of Billable Resources

Review and define the number of billable resources you have on your staff. This includes any team member that does work which is directly billed to clients and should cover full-time, part-time, and contract workers, as all of these resources have trackable time and tasks that go toward revenue-generating projects; but not team members like human resources and accounting staff whose work cannot be billed to clients, as they are largely dedicated to internal, non-billable work.

Knowing the current size of your billable team means you will be able to know the true maximum potential of your company as well as the current output being generated by your employees.

Step 2: Enter Current Billable Utilization Rate

If you are evaluating the effects of your utilization rates, you probably already have data on what the current metrics are, but in case you don’t have your rate in hand, you can calculate your utilization rate by taking the number of billable hours submitted by your business divided by the total number of available hours from your client-facing teams, then multiplying this by 100. Kantata’s Resource Utilization and Revenue Calculator provides helpful prompts throughout, surfacing benchmarking data from SPI’s annual Professional Services Maturity Benchmark that will give you important context on industry averages.

Your billable utilization rate reveals how much of your team’s working hours (or even individual or department hours if you’d like to drill down further) is being spent on work paid for by clients. While reaching 100 percent utilization is not feasible or healthy for employees, a higher rate that is stable, predictable, and manageable means more predictable company revenue.

Step 3: Enter Hourly Rate

Most professional services organizations serving clients on a regular basis have an hourly rate that they charge for their work. This may vary depending on type of client, form of work, and possibly from resource to resource, or your company may work on a retainer basis. In any case, determining the average hourly rate being charged by your organization will help you to better understand the direct effect of your resource utilization rate and any changes that you make to it on the profitability of your business.

Step 4: Review Utilization Impact On Annual Revenue

Together, your number of billable resources, combined with current utilization rates and the hourly rate at which you bill your clients should represent your current annual services revenue. Click “Let’s Optimize That” on the calculator to see what improvements to utilization could mean for your bottom line. 

 

While increasing the number of employees that make up your team or charging a higher hourly rate can increase your annual revenue, these will come with their own costs, including paying more workers on your team and the potential loss of business that comes with increases in what clients must pay for work. However, utilization rates represent the untapped potential of your teams that can be unleashed through optimization.

Improving your billable utilization rate can have a significant impact on revenue by shifting more and more working hours toward billable work instead of internal work or unused bench time. Kantata’s calculator features an easy to understand slider that reveals the potential of your teams, and how even an improvement of just a few percentage points in your utilization rates can lead to a dramatic increase in annual revenue.

Taking Action On Utilization

Once you have the results, look for areas where utilization rates or revenue generation are underperforming targets – these areas represent opportunities for significant improvement in your business and have the potential to unlock transformational value from your existing team. Based on the insights gained from the calculator, brainstorm potential strategies to optimize utilization and increase revenue. Looking for guidance on steps you can take to optimize utilization rates? Check out our how-to-guide on measuring and improving billable utilization.

Remember as you use the Resource Utilization and Revenue Calculator that it is a tool to guide decision-making. It provides a snapshot of your business’s performance, but it’s important to consider other factors and use your judgment to make informed choices. It will take in-depth strategy and the support of a strong resource management software solution to make true, long-lasting improvements.

Kantata clients often see a 10-50% improvement in utilization thanks to the insights and control provided by the Kantata Professional Services Cloud. Learn more about what Kantata can do to improve your utilization and revenue today, starting with our calculator.