Contractor & construction
Contractor Overhead Calculator
Totals contractor overhead, where the owner's unbilled time belongs in it.
Result
Field wages belong in job cost, not overhead. Only include the office, the yard, the vehicles and the people who are not billed directly to jobs.
Get a Free Business AuditHow the calculation works
The monthly total of what the business costs regardless of jobs: vehicles, insurance, licensing and bonding, premises or yard, software, phones, advertising, and administrative or management wages. Divided by revenue it gives the overhead rate that every price has to carry.
What moves the number
- Vehicles, usually the largest line.
- Insurance, licensing and bonding.
- Administrative and management time including the owner's.
- Advertising, which is continuous in most trades.
Where this one goes wrong
Crew wages are job cost rather than overhead, and mixing them in overstates the rate and distorts every price built from it. The item most often missed is the owner's own unbilled time, since estimating, quoting, scheduling, ordering, invoicing and chasing payment produce no billable hours and are real work, and leaving them uncosted makes the overhead rate look lower than it is.
Before you quote
- Keep crew wages in job cost, not overhead.
- Cost the owner's unbilled hours as overhead.
- Divide by revenue to get the rate a price must carry.
Questions
About this calculator
What is usually missing from contractor overhead?
The owner's unbilled time. Estimating, quoting, scheduling, ordering, invoicing and chasing payment generate no billable hours and are real work, and leaving them uncosted makes the overhead rate look lower than it is.
Do crew wages count as overhead?
No, anything that scales with the work is job cost. Overhead is what the business costs when nobody is on a job: vehicles, insurance, licensing, premises, software and administration. Mixing them distorts every price.
How should the overhead rate be used?
As a share of revenue that every price has to carry above direct cost, before any profit. Combined with the target profit it gives the margin, and dividing cost by one minus that margin gives the price.
The formula
overhead rate = total indirect costs ÷ revenue (or ÷ billable hours)
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How to use this calculator
- Rent, yard and utilities (annual) ($). Enter your own figure; the page starts at $24,000.
- Office and admin wages (annual) ($). Enter your own figure; the page starts at $68,000.
- Vehicles, fuel and maintenance (annual) ($). Enter your own figure; the page starts at $42,000.
- Insurance, licences and bonds (annual) ($). Enter your own figure; the page starts at $18,000.
- Marketing and software (annual) ($). Enter your own figure; the page starts at $21,000.
- Annual revenue ($). Enter your own figure; the page starts at $950,000.
The result updates as you type, so you can try a figure, see what it does to overhead as a share of revenue, 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 |
|---|---|
| Rent, yard and utilities (annual) | $24,000 |
| Office and admin wages (annual) | $68,000 |
| Vehicles, fuel and maintenance (annual) | $42,000 |
| Insurance, licences and bonds (annual) | $18,000 |
| Marketing and software (annual) | $21,000 |
| Annual revenue | $950,000 |
| Total billable hours per year | 6,200 |
What comes out
| Result | Value |
|---|---|
| Overhead as a share of revenue main result | 18.21% |
| Total annual overhead | $173,000 |
| Overhead per billable hour | $27.90 |
| Overhead per month | $14,417 |
Overhead of $173,000 a year is 18.21% of revenue, or $27.90 for every billable hour you sell.
How sensitive the answer is
Holding everything else steady and changing only rent, yard and utilities (annual), this is what happens to overhead as a share of revenue. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Rent, yard and utilities (annual) ($) | Overhead as a share of revenue |
|---|---|
| $12,000 | 16.95% |
| $18,000 | 17.58% |
| $24,000 example above | 18.21% |
| $36,000 | 19.47% |
| $48,000 | 20.74% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Rent, yard and utilities (annual) ($)
- A money amount, starting at $24,000.
- Office and admin wages (annual) ($)
- A money amount, starting at $68,000.
- Vehicles, fuel and maintenance (annual) ($)
- A money amount, starting at $42,000.
- Insurance, licences and bonds (annual) ($)
- A money amount, starting at $18,000.
- Marketing and software (annual) ($)
- A money amount, starting at $21,000.
- Annual revenue ($)
- A money amount, starting at $950,000.
- Total billable hours per year
- A number, between 0 and 500000, starting at 6,200.
What the results tell you
| Result | What it is |
|---|---|
| Overhead as a share of revenue | The headline result. A percentage. |
| Total annual overhead | A money figure. |
| Overhead per billable hour | A money figure. |
| Overhead per month | A money figure. |
Overhead is where these go wrong
Pricing and margin figures are only as good as the cost you put in. If your cost covers parts and wages but not the van, the insurance, the phone and the unbilled hours, the markup is paying for those before it becomes profit, and the margin you think you are making is not the one you are making.
Keep going
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