How to Estimate Overhead Expenses

Overhead is every cost that keeps the business running regardless of whether you're working a job that day: office or storage rent, insurance premiums, truck payments and fuel for admin driving, software subscriptions, phone and internet, marketing, your own admin time, and any office staff. It's different from direct job costs like materials and on-site labor, which move with the volume of work you do.

List every recurring cost with its monthly amount, including ones that only hit a few times a year (insurance renewal, annual software billing, license renewal) divided out to a monthly equivalent. Add it up to get total monthly overhead, then multiply by 12 for the annual figure you'll use in pricing and break-even calculations.

Divide annual overhead by your expected annual billable hours or job volume to get an overhead rate per hour or per job — this is the number that gets added to every estimate before markup, so overhead is baked into pricing instead of quietly eating into profit at the end of the year. Our Overhead Calculator does this math for you once you've listed your fixed costs.