Utilisation Rate
Also called: utilization rate, capacity utilisation, capacity utilization
What is Utilisation Rate?
Utilisation rate is the proportion of a business's available capacity that was actually used, expressed as a percentage — booked and delivered hours divided by the hours that were there to sell.
What it tells a business that sells time
A salon chair, a consulting room, a treatment table, a billable hour and a workshop bay are all the same thing economically: capacity that expires. Unlike stock, an unsold hour cannot be sold tomorrow. Utilisation rate is the one number that puts a figure on how much of it expired unsold.
Working it out
Take the period, count the capacity, divide the delivered durations into it. Two chairs open nine hours a day for six days is 108 chair-hours in a week; 69 hours of delivered appointments against that is a utilisation rate of 64%, leaving 39 hours of rent and wages that earned nothing.
Reading it properly
The headline percentage matters less than its shape. Empty capacity is rarely spread evenly — it clusters in particular slots, particular days, particular staff. A business at 64% overall might be at 95% on Saturday and 30% on Tuesday morning, and those two numbers call for completely different responses: pricing or staffing on one, promotion on the other. Very high utilisation is not automatically good either, since a business running at 95% has no room to absorb a rush and nothing left to sell.
Frequently asked questions
It depends on the cost of standing still. Rather than chase a benchmark, multiply your empty hours by what a delivered hour contributes after variable cost, and compare that against the rent and wages those hours carried. That gives you a figure to act on instead of a percentage to feel bad about.