Contractor Overhead Calculator
Overhead is not a percentage you add at the end. It is a dollar figure every billable hour has to carry before the job earns you anything. Get it wrong and you can run a full year, stay busy, and finish flat.
This contractor overhead calculator totals your annual fixed costs and divides them by the hours you can actually bill, so you get one number to carry into every bid. Enter your own costs and billable hours, or start from the defaults and adjust.
What belongs in the overhead pool
- Rent, utilities and officeYard, shop and storage too
- Owner's salaryOverhead, not leftover profit
- Office and admin wagesEstimator, bookkeeper, PM
- Trucks, fuel and maintenancePick one home and keep it there
- Insurance and licensingGeneral liability, bonds, renewals
- Marketing, software, accountingAnything you pay with no job sold
Job cost, your cost of goods sold, is anything that disappears when the job disappears: material, field labor at its burdened rate, subs, permits, dumpsters, rental. Those are direct costs. Everything else is an indirect cost, general and administrative expense, and that is overhead. Work from your chart of accounts, not from memory.
Run the contractor overhead calculator
Enter your annual fixed costs and the field hours you can realistically bill. The calculator returns your total overhead, your overhead per billable hour, and what that adds to a job of any size.
Dollars per hour, not a percentage
A percentage of job cost over-recovers on material-heavy jobs and under-recovers on labor-heavy ones. The same overhead dollars have to come back either way, so recover them on the thing that actually consumes them. Overhead is mostly fixed cost while job cost is variable, and the dollars-per-hour figure you land on is your overhead recovery rate.
Total the pool honestly
Every cost you pay whether or not you sell a job goes in, including the owner's salary. Leave your pay out and every bid is under-priced by whatever you intended to draw, which makes a break-even year look profitable on paper.
Divide by billable hours
You pay for 2,080 hours a year and bill far fewer. Subtract PTO, holidays, shop time, drive time and weather days. Under-estimating billable hours makes your rate too high, which is the safer error to make.
Carry it into every bid
Multiply estimated crew hours by your overhead rate and add it to job cost before profit. On time and materials it sits inside the billed rate. On a fixed price it is a cost line. It never disappears just because the invoice does not show it.
How much revenue overhead eats
Gross margin is the pool overhead comes out of. What survives is net profit, and the published figures show how little that is in a normal year.
23.6%
Share of revenue consumed by operating expenses for remodelers in fiscal 2024, per the NAHB Remodelers' Cost of Doing Business Study. That is the number your gross margin has to clear before a dollar is profit.
29.9%
Average gross profit margin for the same group in the same year. Hold a gross margin near your overhead rate and you are working for free, which is how busy companies end a year with nothing to show.
6.3%
The net profit margin left after overhead. NAHB notes this was the highest net margin remodelers had reported since 1996, which tells you how normal 4% to 5% has been across the industry.
Do not copy the 23.6% into your own bid. It is a survey average across company sizes, trade mixes and markets. A one-truck operation and a company with an office, a project manager and six vans recover overhead at completely different rates, and only your own books know which one you are.
- NAHB Eye On Housing, Remodelers Saw Profit Margin Gains in 2024 — operating expenses 23.6% of revenue, gross margin 29.9%, net margin 6.3%, fiscal year 2024 data.
- NAHB, Home Remodeling Profit Margin, April 2026 — 2026 Remodelers' Cost of Doing Business Study.
Figures checked 11 September 2026. The overhead arithmetic in this tool does not change; the benchmark figures update when NAHB publishes a new study.
Overhead, answered
What counts as overhead versus job cost?
Job cost is anything that disappears if the job disappears: material, field labor and burden, subs, permits, dumpsters, rental. Overhead is what you pay whether or not you sell a job, including rent, office wages, your own salary, insurance, software, vehicles, marketing and accounting. NAHB put remodeler operating expenses at 23.6% of revenue for fiscal 2024.
Should I add overhead as a percentage or a dollar amount per hour?
Dollars per billable hour. A percentage of job cost over-recovers on material-heavy jobs and under-recovers on labor-heavy ones, so two jobs at the same price contribute unequally to the same fixed costs. Total your annual overhead, divide by the hours you can actually bill, and carry that one figure into every bid.
Do I pay myself out of overhead or out of profit?
Out of overhead. Your salary is a cost of running the company, the same as your office manager's. Leave it in profit and every bid is under-priced by whatever you intended to draw, so a break-even year reads as a profitable one. Set a market-rate salary for the role you actually perform and let profit be whatever remains.
Where do truck and fuel costs go, overhead or a separate line?
Pick one home and keep it there. Fold travel, fuel and truck costs into your overhead rate, or break them out as line items, but never both, because double-charging loses bids you should have won. Most contractors running several trucks put vehicle costs in overhead and recover them per billable hour, which keeps the estimate about scope.
How do I figure overhead per hour before I know my billable hours?
Estimate conservatively and true it up monthly. Start from paid field hours and subtract PTO, holidays, shop time, drive time and weather days, because most crews bill well under the 2,080 hours they are paid for. Under-estimating billable hours makes your rate too high, which is the safer error. Re-run it quarterly off real timesheets.
Does flat-rate pricing change how I apply overhead?
The rate stays the same, only the presentation changes. On time and materials it is buried in the billed hourly rate. On a fixed-price scope you multiply estimated hours by the rate and add it to the cost line before profit. Contractors lose money switching to flat rate and quietly dropping the allocation because the invoice no longer shows it.
Your overhead runs whether the phone rings or not
That is the whole problem with a slow month. The rate you just calculated keeps billing you for rent, trucks, insurance and salaries while no job is paying for them.
Zainfy builds the search and ad systems that keep remodeling and construction contractors booked, for contractors anywhere in the USA.
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Zayn founded Zainfy in 2023 and has spent six years in performance marketing for home remodeling and construction companies across the United States. He built this tool set because the contractors he works with were losing more money to pricing math than to any advertising decision.
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