How to Calculate True Availability (And Why Your Revenue Ceiling Is Lower Than You Think)

Week 2 of 4: Understanding What Time Is Actually Available for Billable Work

If you're making capacity plans or resource decisions based on "we have 20 people working 40 hours each," you're working off numbers that don't reflect reality.

20 people at 2,000 hours each gives you 40,000 hours. Subtract PTO and holidays, and you've got your team capacity for the year.

In theory, that IS your revenue ceiling. But that number's misleading. It includes hours you'll never bill.

The problem is assuming available hours equal billable hours. And every hiring decision, pricing strategy, and quarterly plan built on that confusion is setting you up for disappointment.

Whether you're running a creative agency, digital consultancy, or professional services firm, understanding your true availability isn't just about better planning.

Yes, It helps you plan. More importantly, it shows how much revenue your team can actually bring in.

Most teams don't have a capacity problem. Their availability estimates ignore the hours that can't actually be billed.

The Standard Availability Calculation (And Why It's Dangerous)

Most businesses that track time calculate availability like this:

Available Hours = Total Hours - PTO - Holidays - Sick Time

Then they assume 100% of those hours can generate revenue.

Here's the fundamental flaw: this treats your team like billable hour machines instead of humans running a business.

But every person on your team (regardless of role or level) has organizational requirements that aren't billable but can't be eliminated.

Example: Senior developer with 1,750 hours after PTO/holidays/sick time 

• Leadership assumption: 1,750 hours of billable capacity
• Reality: 200 hours of required organizational work (system maintenance, mentoring, pre-sales support)
• Actual billable capacity: 1,550 hours

That's not 1,750 hours of revenue potential. That's 1,550. And the difference (200 hours at $150/hour) is $30K in overestimated revenue you're planning around but can't actually capture.

Why Individual Evaluation Matters More Than Role Categories

Two people might spend very different amounts of time on internal work.

Senior Developer A: 

• System maintenance: 3 hours/week
• Mentoring junior staff: 2 hours/week
• Pre-sales technical calls: 1 hour/week
• That adds up to over 300 hours a year spent on internal tasks.

Senior Developer B:

• System maintenance: 1 hour/week
• Internal training attendance: 1 hour/week
• Total org requirements: 100 hours/year

Same title, same salary. But one has 200 more billable hours than the other. That’s a $30K difference in potential revenue, just because you assumed they were the same.

You can’t plan accurately unless you know what each person’s workload really looks like. Capacity planning only works when it’s built on person-level data.

Organizational Requirements vs. Optional Activities

Not all non-billable work is created equal. The key is distinguishing between what's truly required for the business versus what's inefficient or optional.

Required Organizational Work:

• IT systems: Updates, maintenance, security protocols
• Pre-sales activities: Technical calls, proposal development, client discovery
• Regulatory/compliance: Required training, certifications, audits
• Knowledge transfer: Onboarding new team members, documenting processes

Activities to Evaluate:

• Standing meetings that could be async updates
• Department meetings without clear outcomes or agendas
• Internal projects that don’t improve revenue, efficiency, or retention
• Administrative tasks that could be automated or delegated

The Gray Area:

• Employee events: Essential for team retention and morale, but frequency and format should align with business cycles
• Professional development: Essential for retention and innovation, but timing and scope should align with business cycles
• Internal initiatives: Some internal projects set up future growth. Others just fill calendars.

The rule: Every non-billable activity should map to business impact. If it doesn't directly support revenue, retention, or efficiency, it’s impacting your margins.

How Seasonality Changes Your Availability 

Your availability isn't static across the year. Seasonal patterns dramatically affect when you can push for higher utilization and when you need to plan for reduced capacity.

Q4 Challenges:

• Back-to-back holidays cut workweeks short
• December’s stacked holidays reduce available workdays
• Year-end planning meetings increase
• Client work often slows down
• Strategy: Lower billable goals in Q4 and focus on planning, training, or process cleanups.

Q1 Opportunities:

• Fresh start to the new year, fewer holidays
• Client budgets reset, new project starts
• Team is back from time off, focused
• Strategy: Set higher utilization targets in Q1. This is your window to gain ground.

Summer Availability Variations:

• When vacations pile up, coverage gaps hit hard.
• Client work may slow (depending on industry)
• Strategy: Stagger vacation schedules, plan internal projects 

The key insight: You don't need annual utilization targets. You need quarterly strategies that account for realistic availability patterns.

Calculating Your True Revenue Ceiling

Here’s how to find your team’s true billable potential:

Step 1: Calculate Individual Availability

For each team member:

• Start with available business days in the month
• Subtract holidays
• Subtract planned PTO
• Subtract required organizational work (be specific: 3 hours/week for system maintenance, 2 hours/week for mentoring)
• Result = individual billable capacity

Step 2: Team Capacity Aggregation

• Sum individual billable capacities
• Account for seasonal variations (Q4 might be 85% of baseline, Q1 might be 110%)
• Result = realistic team capacity by quarter

Step 3: Revenue Ceiling Calculation 

• Individual capacity × individual bill rate = individual revenue potentia
• Sum across team = total revenue ceiling
• Factor in quarter-by-quarter shifts based on actual availability data

Example: 20-person team

• Traditional calculation: 40,000 total hours - 8,000 (PTO/holidays) = 32,000 available hours annually
• Realistic calculation by quarter:
• Q1: 7,200 available hours - 800 (org requirements) = 6,400 billable hours
• Q2: 7,200 available hours - 800 (org requirements) = 6,400 billable hours
• Q3: 6,400 available hours - 800 (org requirements) = 5,600 billable hours (summer vacation clustering)
• Q4: 6,400 available hours - 800 (org requirements) = 5,600 billable hours (holiday impact)
• Total realistic capacity: 24,000 billable hours vs. 32,000 hours assumed

Revenue difference at $200/hour: $1.6M in overestimated projections.

That's the difference between sustainable growth and wondering why teams feel overwhelmed even when fully staffed.

What Changes When You Know Your Real Numbers

Once you know your team’s real capacity, more informed decisions follow everywhere:

Capacity (Resource) Planning: You know exactly how much work your team can handle before you need to hire.

Pricing Strategy: You price work based on what your team can actually deliver.

Quarterly Goals: You set targets that match what each quarter allows (holidays, vacations, and all).

Client Communication: You can give timelines your team can meet instead of overpromising.

Growth Decisions: You know whether revenue gaps require more efficiency or additional headcount.

Why Accurate Availability Comes First

The starting point for sound business decisions come from accurate availability. It affects everything from staffing plans to revenue projections.

Next week, we'll dive into the non-billable work audit. How to better identify which tasks drive results and which quietly impact your margins.

But first, you need to know exactly how many hours your team actually has available for billable work. 

Because you can't optimize what you can't measure accurately.

Stop guessing about your real capacity. Use our free 3-minute  Utilization Calculator and see exactly how much billable time your team actually has and what it's worth. You might be surprised by what you discover.

Nova Path Group helps leaders of hourly businesses build profitable, sustainable operations by fixing how they measure and use time. Drawing from years of experience in operations, we focus on the math that actually matters.