Glossary
Non-billable hours
Non-billable hours are working hours spent on activities that cannot be charged to a client. They include internal meetings, business development, training, administrative tasks, internal project work, and time spent on pitches. All agencies have non-billable time; the question is how much and whether it is generating appropriate return.
What counts as non-billable
Common non-billable activities include: new business development and pitching, internal team meetings, training and professional development, administrative and HR tasks, management time, and work on internal agency projects.
Time spent on client work that is later written off or absorbed (because it exceeded budget) is technically non-billable in outcome, though it may have been logged against a client project. This distinction matters for understanding the true cost of over-servicing.
Typical non-billable ratios
Most agencies have 20-35% non-billable time across the whole team when measured as a proportion of total working hours. Senior and management roles tend to run higher non-billable percentages because they carry more internal responsibility. Junior delivery roles should run lower.
When non-billable time exceeds 40% consistently, it is usually a signal of either too much internal overhead, too many pitches that are not converting, or an under-staffed delivery function that is pulling senior people into execution work.
Non-billable time as investment
Not all non-billable time is waste. Business development that converts to new clients, training that improves delivery quality, and thought leadership that builds the agency's reputation are all non-billable activities with clear commercial value. The goal is not to eliminate non-billable time but to ensure it is generating return proportional to its cost.
Example
A 15-person agency tracks non-billable time and finds that, on average, 28% of total hours are non-billable. The breakdown is: 8% internal meetings, 7% new business and pitching, 6% training, and 7% administrative work. The operations lead benchmarks this against industry norms and decides the internal meeting load is unusually high, running a meeting audit to identify and eliminate unnecessary ones.