Wondering how **capacity** works in Productive? This article will tell you everything you need to know.

When looking at capacity for a single person, this is the total number of hours they could potentially work within a time period. We will use **one month** as an example throughout the article.

## It all starts with the cost rate

The cost rate directly affects the capacity of a person. When setting it up, you get to choose the default working days and the daily capacity in hours for each employee.

In the example below, Charles Blake should work Monday through Friday, 8 hours per day.

If there are 20 working days in a month, this leaves Charles Blake with a monthly capacity of 160 hours.

## National holidays

You can find the list of national holidays in **Settings > Holidays.**

We will automatically pull in national holidays for your country based on the locale of your Productive account.

All of these holidays are **non-working days**. Depending on how many holidays there are in a month, the capacity will be reduced accordingly.

Each of these holidays (unique days, overlapping holidays do not stack)** reduces Charles Blake's total monthly capacity by 8 hours per day.**

## Availability

So, Charles Blake's capacity is the total number of working hours in a month, **excluding weekends and holidays (non-working days).**

However, this does not necessarily mean that Charles Blake will be **available** to work 100% of his remaining monthly capacity. The other metric we need to consider here is his **availability**.

The **available time** is affected by time off, such as:

Vacation

Sick leave

Other custom time off you can create on your own

We will now simulate Frank going on vacation for 5 days.

This is what his vacation looks like in the schedule.

As soon as we do this, you will notice a change in the time report. The capacity will remain the same, but the availability will reduce by 40 hours, becoming 128 instead of 168.

**IMPORTANT**

The most important thing to remember is that **all of the utilization metrics are calculated using availability**, rather than capacity. This is more accurate because availability represents the actual number of hours somebody has spent working, regardless of their capacity in a certain time period.

## Paid vs. Unpaid time off

It's important to understand that time off can be either **Paid** or **Unpaid. **Take a look at the image below. This is an example where we have set up a Vacation which can be either Paid or Unpaid.

There's a big difference which you need to be mindful of.

Let's use the example of Frank going on vacation for 5 days.

**#1 Paid time off**

Availability will be reduced by 40 hours

These 40 hours will generate a cost for the agency

The cost is calculated by applying Frank's cost rate per hour during that time period

The cost generated will be $50.00 x 40 h = $2000.00

**#2 Unpaid time off**

Availability will be reduced by 40 hours

These 40 hours will not generate any cost for the agency due to the time off being unpaid