Free calculators · Overhead
Contractor overhead calculator
Work out what it really costs to run your company, then price every bid to cover overhead and still hit your target net margin.
Overhead and bid price
- Annual overhead
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- Per month
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- Per billable field hour
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- % of direct cost
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- % of revenue
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- Break-even revenue
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- Job overhead
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- Bid price
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- Net profit
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- Markup on direct cost
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- Gross margin
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How the math works
Overhead % of direct cost = Annual overhead ÷ Annual direct cost
Overhead % of revenue = Annual overhead ÷ Annual revenue
Break-even revenue = Annual overhead ÷ ((Revenue − Direct cost) ÷ Revenue)
Per hour or % of direct: Price = (Direct cost + Job overhead) ÷ (1 − Net margin)
% of revenue: Price = Direct cost ÷ (1 − Overhead % − Net margin)
Net profit = Price − Direct cost − Job overhead
Example with the default numbers: $190,000 of overhead over $600,000 of direct cost is 31.67%. A $10,000 job carries $3,166.67 of overhead and, at a 10% net margin, bids at $14,629.63: $1,462.96 profit, a 46.30% markup on direct cost and a 31.65% gross margin.
Excel + Google Sheets version
Run it for your whole company.
The Overhead & Markup vs Margin Calculator has a 26-line overhead budget, all three recovery methods side by side and a printable worksheet and cheat card.
Instant digital download. Works in Excel 2016 or later and in Google Sheets. No macros.
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Frequently asked questions
What counts as overhead for a contractor?
Costs that keep the company running but do not belong to one job: office rent, office staff, owner salary not charged to jobs, insurance, licenses, software, phones, vehicles not charged to jobs, accounting and marketing.
Which overhead method should I use?
Percent of direct cost is the most common. Per field hour suits labor-heavy work. Percent of revenue is simple but must be solved together with margin, which this calculator does for you.
How do I include overhead in my bid?
Add the job’s share of overhead to its direct cost, then divide by one minus your target net margin. Adding a markup to direct cost alone often leaves overhead unpaid.
What is break-even revenue?
The sales you need for gross profit to cover overhead. Below it, the company loses money even if each job looks profitable.
Why is my markup so much higher than my margin?
Markup is measured on cost and margin on price. To cover overhead and keep a net margin, the markup on direct cost has to be much larger than the margin you keep.
More free calculators
- Markup vs margin calculator: Convert markup to margin and back, or price a job at the margin you want.
- Labor burden calculator: True hourly cost of an employee and a bill rate at your target margin.