Overhead and Profit on a $1,000 Job
Price the job at
$1,333.33
15% overhead and 10% profit, both taken out of the price rather than added to the cost.
How that number is worked out
These are the figures this page was built with and every line the calculator produces from them. Change anything above and all of it moves.
- Direct job cost: material, labor, subs, equipment1000 $
- Overhead recovery15 %
- Profit you want to keep10 %
Price the job at$1,333.33
| Direct job cost | $1,000.00 |
|---|---|
| Overhead recovered at 15% | $200.00 |
| Profit at 10% | $133.33 |
| Price | $1,333.33 |
| Markup this equals | 33.3% |
| If you had added the percent to cost instead | $1,250.00short by $83.33 |
Overhead rate compared
Profit is held at 10 percent and only the overhead rate moves, so the last column shows what the wrong method would have charged at each level.
| Overhead rate | Price the job at | Markup this equals | If you had added the percent to cost instead |
|---|---|---|---|
| 10% | $1,250.00 | 25% | $1,200.00 |
| 15% | $1,333.33 | 33.3% | $1,250.00 |
| 20% | $1,428.57 | 42.9% | $1,300.00 |
| 25% | $1,538.46 | 53.8% | $1,350.00 |
What else matters here
A thousand dollars of direct cost prices at $1,333.33 at the standard rates, which is $200 of overhead recovery and $133.33 of profit.
The percentages are correct and the dollars are not worth defending. A hundred and thirty three dollars of profit does not survive one return trip for a part, and it does not pay for the phone call, the estimate or the paperwork that came before the job.
Small work is governed by a minimum charge, not by a percentage. Set a number below which you do not quote at all, and price everything under it at that number. On genuinely small jobs the rates also have to be higher: a business doing $1,000 jobs carries far more overhead per dollar of revenue, and at 30 percent overhead and 20 percent profit this same cost prices at $2,000, which is a 100 percent markup.
What this calculator assumes
- The classic 10 and 10 is overhead 10 percent and profit 10 percent. Almost nobody's overhead is actually 10 percent, so work out your own: last year's overhead divided by last year's revenue.
- Both numbers here are treated as margins, taken out of the price, not markups added to cost. That is the conservative reading and it is the one that leaves you whole.
- The wrong way, adding 25 percent to cost and calling it 25 percent O and P, leaves you 5 percentage points short on a $24,000 job. The comparison is below.
Questions people ask
What should I charge for a job that costs me $1,000?
$1,333.33 at 15 percent overhead and 10 percent profit, a 33.3 percent markup. On work this small a minimum charge usually matters more than the percentage.
How do I work out my real overhead percentage?
Last year's overhead divided by last year's revenue. Overhead is everything that is not job cost: insurance, the truck, the phone, software, the accountant, advertising, your office time. Almost nobody's overhead is the 10 percent in the old rule of thumb.
Why not just add the percentage to the cost?
Because a percentage added to cost comes back out of the price as a smaller percentage. Adding 25 percent to a $50,000 cost gives $62,500, and 25 percent of that price is $15,625, not the $12,500 you added. The calculator treats both figures as margins taken out of the price, which is the reading that leaves you whole.
The overhead and profit calculator takes any dimensions you like and hands back the same list.