A Practical Guide to Maximizing Billable Hours
Finding the value in every hour.
Finding the perfect balance of profitability and productivity isn’t always just about keeping your nose to the grindstone.
Of course, nearly every agency can find ways to fine-tune and improve their workflow and overall organizational efficiency. But before you can optimize, you’ll need a clear strategy to get results.
Below, we’ll explore a few key factors and offer practical steps you can take to help your agency maximize value.
How does your agency spend its time?
Maximizing your agency’s profitability starts with a clear understanding of how your team is spending their time.
For most agencies, billable hours—time spent working on client projects—are the “bread and butter” of the organization’s revenue. In other words: these are the hours clients pay for, and reflect the measurable value your agency delivers.
Non-billable hours, alternatively, are the “behind-the-scenes” work that keeps your agency running. These include internal meetings, administrative tasks, onboarding, training, planning, and even process optimization. While not directly contributing to revenue per se, they nevertheless remain a vital part of any successful agency’s operations.
Thus, striking the right balance between billable and non-billable hours isn’t just a question of productivity, but growth strategy. And nailing that balance can be transformative for your agency.
On this front, one helpful metric stands out: Agency utilization rate. Agency utilization rate reflects how many of your team’s total work hours were devoted to billable tasks. Here’s how you calculate it:
(Billable hours ÷ Total available hours) × 100
By tracking billable efficiency, agencies can track just how much of their efforts are devoted to direct revenue-generating tasks. However, your agency utilization rate may ultimately offer a clearer perspective on how effectively your team balances productivity and profitability.
The pros (and cons) of increasing billable hours
Based on everything we’ve said so far, it seems like maximizing billable hours at all costs is advantageous for agencies.
In theory? Absolutely. But in reality, pushing billable hours to the limit comes with complications and consequences that do more harm than good.
Increasing Billable Hours
| Pros | Cons |
|---|---|
| Increased profitability: Can boost revenue by maximizing the use of existing resources without increasing overhead costs. | Possibility of burnout: Constant pressure to increase billable time can harm morale or drive away critical talent. |
| Improved efficiency: Encourages teams to streamline workflows, manage time effectively, and focus on high-value tasks. | Reduced quality: Rushing to meet billing targets may result in mistakes or oversights, damaging client trust. |
| Enhanced client trust: Consistently delivering high-quality work on time reinforces client confidence and enhances your agency’s reputation. | Weakened work-life balance: Longer hours can strain employee well-being and increase turnover risks, creating a long-term ripple effect on team stability. |
Finding the right balance
So, how do you maximize billable hours without driving your team up the wall?
Looking closer at how your team spends their time and applying best practices helps you strike the right balance between revenue and a flourishing work environment. Here’s how to get started:
Track time
At the risk of stating the obvious, you can’t improve your productivity metrics if you’re not measuring them. Keeping tabs on billable and non-billable hours is essential to making informed decisions.
- Use time trackers. Tools like Toggl Track, Harvest, and Clockify are popular choices for agencies. Toggl Track offers a simple, user-friendly interface and robust reporting. Harvest pairs time tracking with invoicing and expense management, making it a great all-in-one solution. For a budget-friendly option, Clockify provides unlimited tracking and integrations, ideal for growing teams.
- Understand no one is 100% productive—or even 80%. A realistic productivity rate is usually between 65–80%, depending on the role. Expecting perfection leads to burnout—so focus on improving workflows rather than squeezing every second of productivity out of your team.
- Ensure your tracking tools suit your team’s workflow. Whether your team is jumping between tasks or devices, choose tools that are easy to use and integrate seamlessly with existing systems. Simplicity and accessibility make all the difference when time tracking becomes a habit.
Conduct a time audit
Once you’ve established a baseline by tracking hours, the next step is to review how that time is spent.
Conducting a time audit—a comprehensive review of how time is spent across your team. This can uncover inefficiencies, pinpoint opportunities for improvement, and ensure resources are being used effectively. By analyzing where hours go you can make informed decisions to optimize your agency’s time and operational efficiency.
- Start by identifying non-billable tasks that can be managed by support staff or operations teams. These contributions and give your dev and creative teams the bandwidth to focus on work that requires their expertise.
- Next, identify repetitive tasks that can be automated. As your agency grows, a process that worked for a handful of clients may no longer be sustainable. Especially when managing dozens—or even hundreds—of ongoing projects. Automating time-consuming activities like invoicing, reporting, or routine updates saves significant time and helps reduce human error.
- Finally, look for any workflow bottlenecks that are slowing down your team. These could stem from outdated processes, underperforming tools, or even demanding clients. Identifying the root causes of delays allows you to make targeted improvements to streamline operations.
Minimize distractions
Distractions at work are nothing new. While some are unavoidable, others—like frequent meetings, endless reporting, and overly chatty coworkers—are within your power to control.
These seemingly insignificant moments add up over time and drain your team’s productivity. Worse, when they lead to constant “crunch time,” they impact your team’s output, morale, and well-being.
One popular way agencies address this is by encouraging their teams to use a productivity technique like the Pomodoro method. These techniques can help teams by breaking work into manageable chunks, reducing the temptation to multitask, and improving overall efficiency. Some tools, like KanbanFlow, directly integrate Pomodoro timers into its functions, making it easy for teams to track time and improve overall productivity.
Streamlining communications is another essential step. Take stock of how many internal communication channels your agency uses and set clear expectations for each one. Are meetings happening too frequently? Are too many people being invited? Are there multiple Slack channels that communicate the same information?
Finally, prioritize building a healthy, balanced work culture that rewards quality work over sheer hours logged. If you encourage your team to lead full, authentic lives outside the office, they’ll show up at work inspired to give their best. And be less tempted by distractions while on the clock.
Consider alternate billing models
While billable hours is likely the most common approach for agencies, it’s certainly not the only way. More importantly, it may not be right for your agency, the culture you’ve built, or your clients.
Just evaluating and thoroughly considering different approaches can help ensure your agency is making the most of its working model. Here are a few options:
Task-level time tracking
Basically, the approach this guide has covered so far. It allows agencies to understand how much time specific tasks take, which can help when it comes to planning for future projects or spotting inefficiencies.
Value-based pricing and sprint methodology
Value-based pricing focuses on the overall value a project brings to your client, rather than the hours spent. This model lets you charge a fee that aligns with your agency’s contribution to the client’s success—whether that’s driving revenue, improving processes, or enhancing their customer experience. Incorporating a sprint-based approach (e.g., two-week work cycles) alongside value-based pricing can help build out a manageable structure that won’t overwhelm your team. This not only enables flexibility in scope, but allows regular opportunities for updates and recalibrations, keeping clients engaged and aligned with progress.
Results-based pricing
While similar to value-based pricing, this model shifts focus entirely to measurable outcomes, such as traffic growth, lead generation, or improved conversion rates. Results-based pricing eliminates time tracking and instead aligns your revenue with the specific goals achieved for the client. It ensures clients see direct, tangible benefits from your work while removing the pressure on your team to bill hours, shifting their focus to delivering high-quality results.
It’s important to remember: Switching to value- or results-based pricing can feel like a big change to clients used to hourly billing. To make the transition smoother, explain how these models better align with their goals and demonstrate the potential for better results. Examples or case studies can go a long way in making the argument for you here.
Finding the right balance
Ultimately, your billing model is about balance—between business needs, client expectations, internal processes, and your team’s well-being. There’s no one-size-fits-all solution, so don’t be afraid to experiment and refine until you find the model that works best for your agency. If you’re looking for ways to make every hour count, WP Engine has a wide range of tools and insights that can help. Check out our recent webinar on mastering dev efficiency, or our recent ebook on improving WordPress site performance—jam-packed with actionable insights.
