Utilisation & Margin Audit for Consulting Businesses
If your revenue is people selling hours, your margin is a function of utilisation, billing realisation, and bench cost. Score your practice against these thresholds.
Utilisation & Billing
Utilisation Rate (billable / available)68–75%<60%
Realised Rate vs Billing Rate>85%<75%
WIP Days (unbilled)15–30 days>45 days
Write-offs as % of Billings<3%>5%
People & Cost
Bench Ratio5–15%>25%
Revenue per Employee$100–160K<$80K
Contractor Premium (% of bid rate)<10%>15%
Regretted Attrition<15%>20%
Concentration Risk
Client Concentration (top client)<20%>30%
Key-Person Risk (% revenue from individuals)<15%>15%
The utilisation trap: When utilisation drops below 60%, many consulting businesses fill the bench with unbillable internal work to "stay productive." This hides the problem and costs you margin on every project that is profitable.
What to do next
If your utilisation is below 65% or your bench ratio is above 20%, the Margin Note gives you a commercial read of your practice economics, benchmarked against what I have seen at consulting businesses your size.
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