Concrete & construction
Construction Overhead Rate Calculator
Works the overhead rate, which every bid has to carry above direct cost.
Result
Overhead is what the business costs whether or not you work. Wages for people who are on jobs belong in job cost instead, and counting them here overstates overhead and underprices everything.
Get a Free Business AuditHow the calculation works
Monthly or annual overhead divided by revenue over the same period, giving the share of each dollar consumed by being in business. That percentage, combined with the target profit, is what a bid has to add above direct cost, and dividing direct cost by one minus the combined figure produces the bid price.
What moves the number
- Overhead total and the revenue it is divided by.
- Whether the revenue period is representative.
- Volume, since the rate falls as revenue rises.
- Whether overhead has grown with a volume that has since fallen.
Where this one goes wrong
The rate falls as revenue rises against a fixed base, which means a bid priced at last year's overhead rate during a quieter year under-recovers overhead on every job and the shortfall only becomes visible at the year end. Recalculate when volume changes. A business whose overhead grew during a busy period and whose volume has since fallen is carrying a rate it cannot recover competitively, which is a structural problem rather than a pricing one.
Before you quote
- Recalculate the rate when volume changes materially.
- Use a representative revenue period, not a peak one.
- Review whether overhead grew with volume that has since fallen.
Questions
About this calculator
Why does my overhead rate change?
Because it is overhead divided by revenue and the base is largely fixed. The rate falls as revenue rises and climbs as it falls, which means a rate from a busy year under-recovers overhead during a quieter one.
How is the rate used in a bid?
Combined with the target profit into a single margin, with direct cost divided by one minus that figure. Adding the percentages to direct cost instead produces a lower price than intended, which is the common error.
What if the rate is uncompetitive?
Then the overhead base is too large for the volume, which is a structural problem rather than a pricing one. Bidding below the rate wins work that does not cover the business, which accelerates rather than solves it.
The formula
overhead rate = monthly overhead / monthly revenue
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Premises per month ($). Enter your own figure; the page starts at $1,800.
- Office and management wages ($). Enter your own figure; the page starts at $5,200.
- Vehicles, fuel and maintenance ($). Enter your own figure; the page starts at $2,400.
- Insurance and licensing ($). Enter your own figure; the page starts at $900.
- Software, phones and internet ($). Enter your own figure; the page starts at $450.
- Marketing and advertising ($). Enter your own figure; the page starts at $1,500.
The result updates as you type, so you can try a figure, see what it does to overhead per month, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Premises per month | $1,800 |
| Office and management wages | $5,200 |
| Vehicles, fuel and maintenance | $2,400 |
| Insurance and licensing | $900 |
| Software, phones and internet | $450 |
| Marketing and advertising | $1,500 |
| Everything else | $700 |
| Monthly revenue | $57,000 |
What comes out
| Result | Value |
|---|---|
| Overhead per month main result | $12,950 |
| Overhead per year | $155,400 |
| Overhead rate | 22.7% |
| Cost of opening the doors | $588.64 |
Overhead runs $12,950 a month, 22.7% of revenue. Every working day costs $588.64 before anybody turns a wheel.
How sensitive the answer is
Holding everything else steady and changing only premises per month, this is what happens to overhead per month. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Premises per month ($) | Overhead per month |
|---|---|
| $900 | $12,050 |
| $1,350 | $12,500 |
| $1,800 example above | $12,950 |
| $2,700 | $13,850 |
| $3,600 | $14,750 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Premises per month ($)
- A money amount, starting at $1,800.
- Office and management wages ($)
- A money amount, starting at $5,200.
- Vehicles, fuel and maintenance ($)
- A money amount, starting at $2,400.
- Insurance and licensing ($)
- A money amount, starting at $900.
- Software, phones and internet ($)
- A money amount, starting at $450.
- Marketing and advertising ($)
- A money amount, starting at $1,500.
- Everything else ($)
- A money amount, starting at $700.
- Monthly revenue ($)
- A money amount, starting at $57,000.
What the results tell you
| Result | What it is |
|---|---|
| Overhead per month | The headline result. A money figure. |
| Overhead per year | A money figure. |
| Overhead rate | A percentage. |
| Cost of opening the doors | A money figure. |
Order slightly more than this
Volume calculations assume a level, properly prepared base and exact dimensions. Sub-base variation, over-excavation and spillage all consume concrete, which is why most contractors add a margin. Running short mid-pour is far more expensive than a small overage.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.