Tree service
Tree Service Overhead Rate Calculator
Works the overhead rate, which is what every price has to carry.
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 overhead divided by monthly revenue gives the share of every dollar that goes to keeping the business open. That percentage is what a price has to recover on top of direct cost before any profit, which is why pricing calculations divide by one minus overhead and margin together rather than adding a margin to cost. The daily figure, overhead divided by working days, is the cost of opening regardless of whether work happens.
What moves the number
- Overhead total, driven by fleet, yard and insurance.
- Revenue, since the rate falls as revenue rises against fixed overhead.
- Working days available after weather.
- Whether the revenue figure used is a representative year.
Where this one goes wrong
Calculating the rate against a storm year gives a flatteringly low figure that will not hold, because overhead stays while revenue reverts. Use a representative year or an average across several. The rate also falls as revenue grows against a fixed base, which is the real argument for scale in this trade, and rises sharply when revenue drops, which is why a quiet year hurts more than the revenue decline alone suggests. Reviewing the rate annually rather than setting it once is what keeps pricing current.
Before you quote
- Calculate against a representative year, not a storm year.
- Review the rate annually as revenue and overhead change.
- Use working days after weather for the daily figure.
Questions
About this calculator
What is a normal overhead rate for tree care?
Higher than a light trade because of fleet, yard and insurance, and it is worth calculating your own rather than using a figure. What matters more than the level is using a representative year, since a storm year gives a flatteringly low rate that will not hold when revenue reverts.
Why does the overhead rate matter for pricing?
Because a price has to recover overhead and profit on top of direct cost, and the correct arithmetic divides by one minus both together rather than adding a margin to cost. Using the wrong rate means every job is priced slightly wrong in the same direction.
Does the rate change as the business grows?
It falls as revenue grows against a largely fixed base, which is the genuine argument for scale here. It also rises sharply in a quiet year, which is why a revenue decline hurts more than the lost revenue alone suggests. Reviewing it annually keeps pricing honest.
The formula
overhead rate = monthly overhead / monthly revenue
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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 | $37,000 |
What comes out
| Result | Value |
|---|---|
| Overhead per month main result | $12,950 |
| Overhead per year | $155,400 |
| Overhead rate | 35.0% |
| Cost of opening the doors | $588.64 |
Overhead runs $12,950 a month, 35.0% 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 $37,000.
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. |
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.