Contractor Overhead Calculator
Calculate your business overhead percentage and determine proper markup rates.
Calculate your true overhead percentage and minimum hourly rate. Most contractors underestimate overhead by 15-40%, leading to chronic underpricing.
Business & Revenue
Only hours you can actually charge (not estimates, travel, paperwork)
Fixed Overhead (Monthly)
Enter monthly amounts -- the calculator annualizes them automatically.
Insurance & Legal (Annual)
Variable Overhead (Monthly)
Enter monthly amounts except Professional Development (annual).
Hidden Overhead (Annual)
These are the profit killers most contractors forget. Enter annual amounts.
Obvious Costs Only
Most contractors only count rent, insurance, and maybe a truck payment. Reality: overhead includes every business expense that doesn't directly touch a specific job.
"Ballpark" Estimates
"I think my overhead is about 30%." Problem: guessing overhead leads to systematic underpricing on every job.
Industry Averages
"Everyone says overhead should be 35%." Reality: your overhead might be 15% or 60% depending on your business model, trade, and market.
Forgetting Hidden Costs
The expenses that kill profit margins: owner salary, downtime, collection time, equipment maintenance, and professional development.
HVAC Contractor
- Annual overhead: $125,000
- Billable hours: 1,800
- Labor revenue: $225,000
- Overhead percentage: 56%
Key costs: recovery equipment, seasonal cash flow, heavy vehicle maintenance, refrigerant inventory
Plumbing Contractor
- Annual overhead: $98,000
- Billable hours: 1,600
- Labor revenue: $160,000
- Overhead percentage: 61%
Key costs: truck stock inventory, specialized tools (cameras, augers), water damage insurance, emergency response
Electrical Contractor
- Annual overhead: $110,000
- Billable hours: 1,750
- Labor revenue: $192,500
- Overhead percentage: 57%
Key costs: continuing education, code books and software, testing equipment, higher liability insurance
General Contractor
- Annual overhead: $180,000
- Billable hours: 2,000
- Labor revenue: $280,000
- Overhead percentage: 64%
Key costs: project management time, multiple licenses, bonding and insurance, subcontractor coordination
1. Price Jobs Correctly
Job Price = Materials + Labor + (Labor x Overhead %) + Profit Margin2. Set Minimum Hourly Rates
Minimum Rate = (Hourly Wage + Burden) x (1 + Overhead %)3. Evaluate Job Profitability
- Did this job cover its overhead share?
- What was the actual profit margin?
- Should you raise prices for similar work?
4. Make Business Decisions
- Can you afford new equipment?
- Should you hire additional help?
- Is your pricing competitive but profitable?
Reduce Fixed Overhead
- Negotiate lower rent or consider relocation
- Shop insurance annually for better rates
- Refinance equipment at lower interest rates
- Combine services (shared shop space, bulk purchasing)
Improve Efficiency
- Reduce estimate time with standardized processes
- Minimize travel time with route optimization
- Automate paperwork with software solutions
- Batch similar tasks to reduce setup time
Increase Billable Hours
- Charge for estimates on large projects
- Implement service call fees to cover diagnostic time
- Reduce callbacks with quality control processes
- Focus on profitable work types
Red Flags You Are Underpricing
- Working 60+ hours but barely making ends meet
- Cannot afford equipment upgrades when needed
- Constantly stressed about cash flow
- Always choosing the cheapest materials
- Avoiding jobs because they "cost too much"
- Unable to take vacation without financial stress
Healthy Overhead Indicators
- Consistent profitability across job types
- Ability to reinvest in equipment and training
- Comfortable owner salary and benefits
- Cash reserves for slow periods
- Can compete on value instead of price
Background: Regional electrical contractor, 8 employees, struggling with profitability.
Before
- Estimated overhead: 25%
- Actual overhead: 47%
- Net profit margin: 3%
- Owner working 65 hours/week
After
- Net profit margin: 28%
- Owner reduced to 45 hours/week
- Cash flow improved 340%
- Investing in growth opportunities
Time to transformation: 14 months
This contractor overhead calculator helps professional contractors identify all hidden business costs, calculate true overhead percentages, and determine minimum pricing for profitability. Stop guessing -- know your numbers.