February 18, 2026
4 min read
Quickestimate
Why Overhead % Matters
Most contractors undercharge because they only think about direct costs — materials, labor, equipment. But every project you take on also has to carry a share of your indirect costs: the rent on your office, the insurance premium, the bookkeeper's salary, the truck lease, the software subscriptions.
If you don't build these into your estimates, you're paying for them out of your profit — or worse, out of your own pocket.
The goal: Know exactly what % of every dollar of revenue goes toward keeping your business running — so every estimate you send is priced to cover it.
Step 1: Identify All Overhead Costs
Start by listing every cost that exists whether or not you have active projects. These are your fixed and semi-fixed overhead costs. Common categories include:
🏢 Facilities
Office or yard rent, utilities (power, water, internet), cleaning services, property taxes.
🛡️ Insurance
General liability, workers' comp (non-field staff), commercial vehicle insurance, professional indemnity.
👩💼 Admin & Management
Office manager, bookkeeper, estimator salaries — any staff not directly on job sites.
🚗 Vehicles & Equipment
Truck/van leases, fuel for non-job travel, maintenance on company vehicles not charged to jobs.
💻 Software & Tools
QuickEstimate, accounting software, CRM, phone plans, any SaaS subscriptions.
📣 Marketing & Sales
Website, advertising, trade memberships, business development activities.
Don't include: Field labor wages, subcontractor costs, job-site materials, or equipment rental specific to a project. Those are direct costs and belong in your estimate line items, not overhead.
Step 2: Calculate Total Annual Overhead
For each overhead cost, determine its annual total. Monthly costs multiply by 12; quarterly costs by 4. Add everything together into a single annual overhead figure.
| Cost Item | Monthly | Annual |
|---|---|---|
| Office rent | $2,500 | $30,000 |
| Utilities | $450 | $5,400 |
| Office manager salary | $4,200 | $50,400 |
| General liability insurance | $800 | $9,600 |
| Vehicle leases (2) | $1,100 | $13,200 |
| Software subscriptions | $310 | $3,720 |
| Marketing / website | $600 | $7,200 |
| Total | $9,960 | $119,520 |
Step 3: Determine Your Annual Revenue Base
Use your projected annual revenue — or last year's actual revenue if you want a historical benchmark. This is the total amount billed to clients, not the profit. If you're just starting out, use your realistic revenue target for the year.
In this example, we'll use $600,000 in projected annual revenue.
Step 4: Calculate the Percentage
Example: $119,520 ÷ $600,000 × 100 = 19.9% → round up to 20%
In this example, 20% of every dollar of revenue is consumed by overhead. That means on a $50,000 project, $10,000 goes toward keeping the lights on before you see a cent of profit.
Entering It in QuickEstimate
Go to Settings → Company Profile
In the left sidebar, click your company name then select Settings.
Find the "Default Overhead %" field
Enter your calculated overhead percentage. This will automatically apply to every new estimate you create going forward.
Save and verify on an existing estimate
Open any draft estimate and check the totals panel to confirm the overhead line is calculating correctly.
How Often to Recalculate
Your overhead percentage isn't static. Recalculate it whenever:
- You hire or let go of admin/management staff
- You move offices or change your lease terms
- Your insurance premiums renew at significantly different rates
- Your annual revenue grows or contracts significantly (20%+)
- At minimum, recalculate once per year at the start of each fiscal year
Good practice: Most small-to-mid-size contractors run overhead between 15% and 25%. If your number comes out above 30%, it's worth reviewing each cost category to find savings opportunities before adjusting your pricing.