How to Use Kantata’s Utilization and Revenue Calculator: A Step-by-step Guide
Is your professional services business falling short of its revenue goals?
Kantata’s Resource Utilization and Revenue Calculator is a tool designed to help professional services businesses 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 affecting how much money a business can truly make in a year and how efficiently its billable resources drive growth.
By using this utilization rate calculator, you can gain insights into your business’s financial performance and identify areas for improvement. The following are four easy steps to use Kantata’s resource utilization and revenue calculator and understand where fast, effective improvements can be made that can quickly impact your business’ bottom line.
Step 1: Enter Your Billable Resource Count
Review and define the number of billable resources on your staff:
- Include: Full-time, part-time, and contract workers who perform client-billable work; anyone with trackable time and tasks that go toward revenue-generating projects
- Exclude: Internal support roles like human resources and accounting staff whose work cannot be billed to clients
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 Your 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. If you don’t have your rate in hand, here’s how to calculate it:
- Take the number of billable hours submitted by your business
- Divide by the total number of available hours from your client-facing teams
- Multiply by 100 to get your percentage
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.
What your rate reveals:
- How much of your team’s working hours is being spent on client-paid work
- Can be analyzed at the team, department, or individual level for deeper insights
- While 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 Your Billable Hourly Rate
Most professional services organizations that serve clients regularly charge an hourly rate for their work. Your rate may vary based on:
- Type of client or project
- Form of work being performed
- Individual resource or team member rates
- Retainer versus hourly billing arrangements
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 Your 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
- Model different utilization scenarios with an interactive slider
- Discover the revenue impact of even small percentage improvements
Why Should Professional Services Businesses Focus on Utilization Rate Optimization?
It’s worth understanding why utilization rate improvements are often the most effective revenue lever available.
The cost of other revenue growth strategies:
- Increasing the number of employees that make up your team can boost annual revenue, but comes with the cost of paying more workers
- Charging a higher hourly rate can increase revenue, but risks the potential loss of business that comes with increases in what clients must pay for work
Utilization rates, however, represent the untapped potential of your teams that can be unleashed through optimization
How utilization improvements drive revenue:
- Shifts more working hours toward billable work instead of internal work or unused bench time
- Reduces wasted capacity and maximizes the productivity of your existing team
- Delivers immediate revenue gains without adding headcount or raising prices
Kantata’s Utilization 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.
Take Action On Utilization: Turn Data into Revenue
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.
Next steps after using the calculator:
- Identify specific teams, departments, or resources with utilization gaps
- Brainstorm potential strategies to optimize utilization and increase revenue based on your insights
- Prioritize quick wins that can deliver immediate impact on your bottom line
Looking for guidance on steps you can take to optimize utilization rates? Check out our how-to guide on measuring and improving billable utilization for actionable strategies you can put into practice right away.
The Resource Utilization and Revenue Calculator 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 an in-depth strategy and the support of a strong resource management software solution to make true, long-lasting improvements.
Turn Insights Into Lasting Results With Kantata’s Resource Capacity Planning and Optimization Solution
The calculator shows you the revenue potential; but realizing those gains requires real-time visibility and control over your resources.
Kantata clients often see a 10-50% improvement in utilization thanks to the insights and control provided by Kantata’s Professional Services Automation platform. Here’s how Kantata tackles the root causes holding your utilization back:
- Skills availability: Track who has the right skills and when they’re available
- Accurate bench data: Know exactly which resources are billable vs. on the bench
- Cross-project visibility: See allocation and availability across all projects in real time
- AI-driven optimization: Evaluate staffing scenarios beyond human capacity with the Staffing Optimizer
See how it works in action. Kantata’s Resource Capacity Planning & Optimization solution gives you the visibility and governance you need to optimize resource capacity planning and manage your workforce efficiently, all in one place, in real time. Request a demo to learn how Kantata can turn your utilization insights into revenue growth.
FAQs
What is Kantata’s utilization calculator?
Kantata’s utilization tool is a resource utilization calculator designed to help professional services businesses estimate the revenue impact of improving their utilization rates. By entering your number of billable resources, current utilization rate, and hourly billing rate, you can instantly see how even small improvements in utilization can translate to significant annual revenue gains.
How do I calculate utilization rate using Kantata’s calculator?
To calculate utilization rate, divide the number of billable hours submitted by your business by the total number of available hours from your client-facing teams, then multiply by 100. If you don’t have your current rate calculated, Kantata’s utilization rate calculator will help you understand this metric and compare it against industry benchmarks from SPI’s Professional Services Maturity Benchmark.
What data do I need to use Kantata’s resource utilization calculator?
To use the resource utilization calculator effectively, you’ll need three key inputs: your number of billable resources (full-time, part-time, and contract workers), your current billable utilization rate, and your average hourly billing rate. The utilization calculator will then show you your current annual services revenue and the potential revenue impact of utilization improvements.
Can Kantata’s utilization rate calculator show me different optimization scenarios?
Yes! Kantata’s utilization rate calculator features an easy-to-understand interactive slider that lets you model different utilization scenarios. You can adjust your target utilization rate to see exactly how improvements would affect your bottom line. This helps you calculate utilization rate targets and understand the revenue potential before making any changes to your operations.
How accurate is Kantata’s utilization calculator for forecasting revenue?
Kantata’s utilization calculator provides accurate revenue projections based on the inputs you provide – your billable resources, utilization rates, and hourly rates. While this resource utilization calculator offers valuable insights for decision-making, it’s important to remember it provides a snapshot of potential. For lasting improvements and real-time resource management, a comprehensive resource capacity planning solution like Kantata Professional Services Cloud delivers the ongoing visibility and control needed to achieve and sustain higher utilization rates.