If you walk through the (virtual) hallways of most professional services firms today, everyone looks busy. Calendars are blocked, Slack is chirping, and teams are working late. Yet, when the P&L lands at the end of the month, the EBITDA line tells a different story. You are experiencing the utilization gap.
According to the 2025 Professional Services Maturity™ Benchmark by SPI Research, the average billable utilization rate across the industry has dropped to 68.9%. To put that in perspective, this is the lowest point in five years, down from a high of 73.2% in 2021. For a firm doing $10M in revenue, that 4.3% slide represents roughly $430,000 to $600,000 in lost pure profit depending on your margins.
For Scaling Sarah—our archetype of the Founder-CEO hitting growth friction—this is usually a silent killer. You see activity, so you assume productivity. But in 2025, three forces are eroding billable hours:
The danger zone is real. Firms dropping below 70% utilization rarely break 10% EBITDA margins. To get back to the healthy 20%+ EBITDA range, you need to target specific utilization rates by seniority, not just a blanket "75% for everyone."
The biggest mistake firms make is setting a flat utilization target (e.g., "Everyone needs to be 80% billable"). This creates two problems: it burns out your delivery leads who need time for mentorship, and it lets your juniors off the hook when they should be heads-down delivering.
Based on 2025 industry data from SPI Research, Kantata, and cross-referenced operational benchmarks, here are the targets you should be enforcing to maintain healthy Unit Economics.
Target: 80% - 85%
These are your production engines. They have minimal administrative burden, no sales quota, and limited internal management duties. If they are below 75%, you either have a pipeline problem or an onboarding bottleneck.
Target: 70% - 75%
This is the hardest role to balance. They must deliver billable work while also managing project governance, mentoring juniors, and handling client escalations. The dip from 80% to 70% accounts for the "context switching tax" inherent in management.
Target: 40% - 60%
At this level, the value shifts from production to leverage. You want them billing for high-value strategy, but you also need them driving expansion revenue (Upsell/Cross-sell) and creating IP. If a Principal is billing 90%, they aren't building the future of the firm.
Target: 20% - 35%
Partners should only bill on the most critical strategic initiatives or during high-stakes negotiations. Their primary "utilization" is sales, strategy, and firm-building.
Data from SPI Research indicates that firms achieving "Level 5" maturity (optimized processes) see 28% higher EBITDA than their peers. This isn't just about working harder; it's about realization—ensuring that every hour worked is an hour billed.
If your firm is hovering at the industry average of 68.9%, you are likely leaving 15-20% of your potential profit on the table. You don't need to fire people; you need to engineer your systems.
Most utilization leakage hides in "Gray Time"—hours that are work, but not billable. Run a 2-week time study. If your engineers are spending 4 hours a week on internal "stand-ups" and "status updates," that's 10% of their billable capacity gone. Tribal knowledge transfers are massive time sinks. Document your processes to stop the repetitive "how do I do this?" interruptions.
Aiming for 100% is mathematically impossible and culturally toxic. It guarantees burnout and zero innovation. Instead, build your financial model on a conservative 72% blended average. If you can't be profitable at 72%, your revenue architecture and pricing are broken, not your people.
Don't just track firm-wide utilization. Your weekly Flash Report should show utilization variance by role. If Juniors are at 90% and Seniors are at 40%, you are burning out your future leaders while overpaying for delivery. If the inverse is true (Seniors at 80%, Juniors at 50%), you have a delegation problem.
Scaling Sarah often tries to fix utilization by demanding "more hustle." But hustle doesn't fix a broken capacity model. By benchmarking against these 2025 standards and rigorously enforcing role-based targets, you turn utilization from a stress metric into a predictable lever for EBITDA expansion.
For a deeper dive into how low utilization impacts your valuation, read about how 68.9% utilization bleeds EBITDA dry.
