What Utilization Actually Measures, and the Industry Benchmark
Utilization rate is the share of an agency's working hours spent on billable client work versus everything else: internal projects, admin, business development, and idle time. Per TMetric's 2025 benchmark study of 250-plus agencies, the industry-average utilization rate is 60%, and the optimal, peak-profit range sits at 65% to 80%. Below that range, an agency is likely underutilizing staff relative to what it's paying them. Above it, there's effectively no slack left in the system for anything that isn't billable work, including the work of finding the next client.
The Band That Matters Most for BD: Freelancer and Small Shops Run Hottest
TMetric's dataset breaks utilization out by agency size, and the pattern is not what you'd expect if you assumed bigger meant busier. Freelancer and small shops (1 to 10 FTE) run the highest band in the dataset, 70% to 85%. Mid-size agencies (11 to 50 FTE) run 60% to 75%, the widest and most variable band. Larger agencies (50-plus FTE) actually run lower, 65% to 70%, which TMetric attributes to management and coordination overhead rather than a lack of client demand. The smallest shops, in other words, are the ones with the least room left in the week.
Why High Utilization and Weak BD Are the Same Symptom
Line up the utilization data against SparkToro's staffing numbers and the picture gets sharper. 70% of agencies overall have no full-time salesperson, and only 14% describe their pipeline as very healthy. Freelancer and small shops, the ones running 70% to 85% utilization per TMetric, are the least likely of any size band to have spare hours to reallocate toward BD even if they wanted to. A fully-billable week has nowhere for a discovery call, a follow-up cadence, or a proposal to fit without displacing paid client work. That's not a motivation problem. It's a capacity math problem, and it shows up as a weak pipeline because the hours for BD were never actually available.
What Headroom Actually Buys You
The point of tracking utilization isn't to run the number down for its own sake. TMetric's own optimal range, 65% to 80%, still leaves 20 to 35 percentage points of a working week for everything that isn't direct client delivery. What matters is knowing your actual number and deciding deliberately how much of that non-billable time goes to new business versus internal ops, training, or admin, instead of BD losing by default to whatever's most urgent that day. An agency running at 90% utilization with no plan for where BD time comes from isn't choosing not to prioritize new business. It's already made that choice by not leaving room for it.
A Practical Checklist for Finding BD Capacity Without Starving Delivery
- Know your actual utilization rate before assuming you have (or don't have) capacity for BD. Most agencies, per TMetric, aren't tracking this precisely enough to know.
- If you're running above 80% to 85%, treat that as a structural reason BD isn't happening, not a discipline problem with whoever's supposed to be doing it.
- Decide deliberately how many hours a week go to new-business activity, rather than leaving it to whatever's left over.
- Consider what capacity a booked-meeting model buys back versus running prospecting and qualification in-house on top of an already full week.
- Revisit the number quarterly. Utilization shifts with client load, and BD capacity needs to shift with it.
| Agency Size | Utilization Band | Note |
|---|---|---|
| Freelancer / small (1 to 10 FTE) | 70% to 85% | Highest band in the dataset; least spare capacity for BD. |
| Mid-size (11 to 50 FTE) | 60% to 75% | Widest and most variable band. |
| Larger (50+ FTE) | 65% to 70% | Lower despite more resources; attributed to management and coordination overhead, not lack of demand. |
| Industry average / optimal range | 60% avg, 65% to 80% optimal | Peak-profit range per TMetric. |
TMetric 2025 benchmark study, 250-plus agency dataset.
What this means for you
- Industry-average agency utilization is 60%, with an optimal, peak-profit range of 65% to 80%, per TMetric's 2025 study of 250-plus agencies.
- Freelancer and small shops (1 to 10 FTE) run the hottest utilization band, 70% to 85%, higher than mid-size or larger agencies.
- That same segment is least likely to have full-time BD staff (70% of agencies overall have none, per SparkToro), so the shops with the least slack also have the least dedicated BD capacity.
- A weak BD pipeline at high-utilization agencies is a capacity math problem, not a motivation problem: the hours for it were never actually free.
Sources
The external data in this guide draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- TMetric, 2025 Marketing Agency Profitability Benchmarks (250+ agency dataset)
- SparkToro / Paddy Moogan, State of Digital Agencies 2025