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Contractor Overhead Rate Calculator
Enter your monthly fixed costs to see your true overhead rate, overhead per job, and the markup you need to stay profitable.
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Calculate Your Overhead Rate
Enter what you pay each month in fixed costs to see your overhead rate and how it should affect your job pricing.
Enter your monthly expenses in each category (leave blank if not applicable)
📋 Important: All calculator results are ballpark estimates
The figures shown are approximate estimates based on typical averages and should be used for general planning purposes only. They are not a substitute for a professional assessment or written contractor quote. Actual costs, savings, and results will vary significantly based on your specific circumstances, local market conditions, equipment choices, and contractor pricing. Always confirm any estimate with a licensed contractor, financial advisor, or qualified professional before making purchasing or financial decisions.
Why Your Overhead Rate Is Your Most Important Number
Most contractors price jobs without knowing their overhead
The most common pricing mistake in contracting is bidding based on materials + field labor + a rough markup — without ever calculating whether that markup actually covers the office, insurance, vehicles, and admin that keep the business running. If your overhead is 25% but you're only marking up 20%, you're losing money on every job, even if the work is done right.
The correct formula: overhead + profit on top of direct costs
Once you know your overhead rate, you can price jobs correctly. If direct costs = $4,000, overhead rate = 22%, and target net profit = 12%, then your sell price = $4,000 ÷ (1 − 0.22 − 0.12) = $4,000 ÷ 0.66 = $6,061. This ensures each job pays its full share of overhead and still generates real profit — not just gross margin that disappears by the end of the month.
Healthy overhead benchmarks by trade
| Trade | Typical overhead rate |
|---|---|
| HVAC contractor | 18–30% |
| Roofing contractor | 15–25% |
| Solar installer | 20–32% |
| General remodeling | 20–35% |
| Electrical / plumbing | 18–28% |
| Landscaping / lawn care | 25–40% |
Review overhead every quarter, not every year
Overhead creep — small expenses that add up over time — is one of the most common profitability killers in contracting. A quarterly overhead review takes 30 minutes and can catch software subscriptions you no longer use, insurance renewals that went up silently, or vehicle costs that have grown beyond what the business can support at current revenue.
Know Your Numbers. Price With Confidence.
SubcontractorHub helps contractors track job costs, build accurate proposals, and see real profitability on every project.
Book a Free DemoFrequently Asked Questions
What is overhead rate for a contractor?
Overhead rate is the percentage of revenue consumed by indirect costs — expenses that aren't tied to a specific job (rent, vehicles, insurance, admin staff, marketing). A healthy overhead rate for most contractors is 15–30% of revenue. If yours is higher, you may need to raise prices or reduce fixed costs.
What's the difference between overhead and profit?
Overhead covers costs you incur whether or not you're working on a job — your fixed expenses. Profit is what's left after you've paid all direct costs (materials, field labor) and all overhead. Many contractors confuse the two and price jobs to cover overhead but forget to add profit on top.
How do I use my overhead rate to price jobs?
Add your overhead rate to your direct costs as a percentage, then add your target profit margin. Example: job direct costs = $5,000, overhead rate = 20%, target profit = 15%. Sell price = $5,000 ÷ (1 − 0.20 − 0.15) = $5,000 ÷ 0.65 = $7,692. This ensures each job covers its share of overhead AND generates profit.
What counts as overhead vs. a direct job cost?
Direct costs (COGS) are tied to a specific job: materials, subcontractors, and field technician/crew labor for that project. Overhead is everything else: your office rent, non-billable admin staff, company vehicles when not on a job, insurance, marketing, and software. The rule of thumb: if you'd still pay it even with no jobs, it's overhead.
What overhead rate is too high for a contractor?
If overhead exceeds 35% of revenue, most contractors struggle to price competitively while maintaining healthy profit. Common culprits: too many non-billable staff, underutilized vehicles, or high rent for space that doesn't generate revenue. Review each category annually and cut or renegotiate where possible.
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Get a Free DemoAll calculations are estimates based on the expense values you enter. Overhead rates and markup multipliers are for planning purposes only — consult an accountant or financial advisor for business-specific guidance.