Free Overhead Calculator for Contractors
Overhead is everything the business pays for that isn’t tied to one job: rent, insurance, trucks, phones, software, office help. Add yours up month by month. You’ll see what each billable hour has to carry and how much work you need to sell to break even.
Your overhead
How to calculate overhead
Monthly overhead = the sum of every overhead line
Overhead per billable hour = Monthly overhead ÷ Billable hours per month
Overhead % = Monthly overhead ÷ Monthly revenue × 100
Break-even revenue = Monthly overhead ÷ Gross margin %
Gross margin is what’s left of revenue after direct job costs (labor, materials, subs).
Examples
A three-person remodeling company
Overhead is $14,500 a month. The crew bills 400 hours a month, so each billable hour carries $36.25 of overhead. On $90,000 of monthly revenue, overhead is 16.1%. With a 32% gross margin, break-even revenue is $14,500 ÷ 0.32 = $45,313 a month.
An owner-operator
Truck, insurance, phone and software come to $3,200 a month. Billing 120 hours, overhead is $26.67 per hour. At a 40% gross margin, the business needs $8,000 of work a month to break even.
Overhead Calculator: common questions
What counts as overhead for a contractor?
Costs you pay no matter which jobs you run: office or shop rent, insurance, vehicles and fuel, phones, software, office staff, marketing, accounting and loan payments. Labor and materials for a specific job are direct costs, not overhead.
What is a normal overhead percentage in construction?
It varies a lot by size and trade. Many small remodelers run 15% to 30% of revenue. The point is to know your own number and price to cover it.
Is the owner’s salary overhead?
The part of your time spent running the business (sales, estimating, office) is overhead. Time spent working on jobs is labor on those jobs.
How do I find billable hours per month?
Add up the hours your field team can charge to jobs in a typical month. Leave out drive time, shop time and days off.
What is break-even revenue?
The monthly sales you need so that the gross profit from jobs pays all your overhead. Below it, you lose money even when each job looks profitable.
Should I count yearly bills?
Yes. Divide them by 12. A $6,000 yearly insurance premium is $500 a month of overhead.
How often should I recalculate overhead?
At least once a year, and whenever you add a truck, a hire, an office or a loan.
How does overhead affect my markup?
Your markup has to cover overhead before any of it is profit. If overhead is 20% of revenue and you want 10% profit, your gross margin has to be at least 30%, which means a markup of about 43% on direct cost.
Talk to a person who knows remodeling.
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