Realization rate
also known as realisation rate · billing realization
The share of worked hours that actually get billed and paid, after write-offs and discounts. Where planned revenue leaks away before it reaches an invoice.
For example, a team logs 100 hours on a project but only bills 85 after non-billable rework and a goodwill discount - an 85% realization rate. The missing 15% is revenue that was earned in effort but never invoiced.
Why it matters to agencies: realization rate exposes the gap between the work you do and the money you keep. A low rate - from scope creep, over-servicing or discounting - can quietly erase a project's profit even when utilisation looks healthy, so it is one of the most revealing numbers an agency can track.
Aim to keep realization above roughly 90%; much lower means scope creep, over-servicing or discounting is eating into billed work.
Realization rate = hours billed ÷ hours worked × 100
Differs from utilisation, which measures billable vs available hours.
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What is realization rate?
The share of worked hours that actually get billed and paid, after write-offs and discounts. Where planned revenue leaks away before it reaches an invoice.
How do you calculate realization rate?
Divide the hours actually billed by the hours worked on client work, then multiply by 100.
What is the difference between realization and utilisation?
Utilisation is billable hours over available hours; realization is billed hours over worked hours - one measures how busy you are, the other how much of that work you collect.
What causes a low realization rate?
Scope creep, over-servicing, unbilled rework and discounting all push worked hours above billed hours, dragging realization down.