Construction Overhead Calculator
Add up what it costs to keep your business open and turn it into an overhead rate you can price with: a percent of labor, a percent of revenue, or a cost per billable hour. Then download a clean summary.
- Live results
- Three ways to read your rate
- PDF summary
Step 1
Enter what you spend in a typical month on costs that are not tied to one job. Leave blank what does not apply.
Step 2
Overhead only means something next to a base. Fill in the one you price with, or all three to compare.
Step 3
Pick the rate you want front and center.
What Is Construction Overhead?
Overhead is the cost of keeping your business open that you cannot charge to a single job. It includes rent and utilities, insurance and licenses, vehicles, office and admin pay, software, accounting and legal fees, and marketing. You pay it in a slow month as well as a busy one, so every job you sell has to carry a share of it.
How to Calculate Your Overhead Rate
Add up a year of overhead, then divide it by a base that fits how you price. The three common bases are your annual direct labor cost, your annual revenue, and your billable hours.
The base is direct labor cost for a percent of labor, revenue for a percent of revenue, or billable hours for a cost per hour.
Worked Example
A contractor spends $8,000 a month on overhead. That is $96,000 a year.
These are three ways of describing the same $96,000. A job with $1,000 of direct labor would carry $400 of overhead using the first rate, and an hour of billable work would carry $24 using the last.
Which Base Should You Use?
- Percent of direct labor is common in labor-heavy trades and is easy to apply to a labor estimate.
- Percent of revenue is simple to track from your books and works when your jobs vary a lot in material cost.
- Cost per billable hour suits time-based and service work.
Pick one, use it the same way on every estimate, and do not mix bases on the same job.
Overhead vs Markup vs Margin
Overhead is a cost. Markup and margin are how you add profit on top of your costs. Add your overhead to your job cost first, then apply profit. Use the markup calculator or the margin calculator for that step, and the employee cost calculator to get your true labor cost before you start.