Overhead and Profit on a $15,000 Job
Price the job at
$20,000.00
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, equipment15000 $
- Overhead recovery15 %
- Profit you want to keep10 %
Price the job at$20,000.00
| Direct job cost | $15,000.00 |
|---|---|
| Overhead recovered at 15% | $3,000.00 |
| Profit at 10% | $2,000.00 |
| Price | $20,000.00 |
| Markup this equals | 33.3% |
| If you had added the percent to cost instead | $18,750.00short by $1,250.00 |
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% | $18,750.00 | 25% | $18,000.00 |
| 15% | $20,000.00 | 33.3% | $18,750.00 |
| 20% | $21,428.57 | 42.9% | $19,500.00 |
| 25% | $23,076.92 | 53.8% | $20,250.00 |
What else matters here
Fifteen thousand of cost prices at $20,000, with $3,000 of overhead recovered and $2,000 of profit.
The number this page depends on is the cost, and a cost is perishable. Lumber, copper, shingles, insulation and steel have all moved by double digits inside a single quarter in recent years, and a quote written off a sixty day old material take off is a quote written off a price that no longer exists.
Two habits fix it. Put an expiry date on every proposal, thirty days is normal and fourteen is defensible in a volatile market, and get a written quote from the supply house for anything that is a large share of the cost. Neither of these is aggressive, and both are far easier to explain before the contract is signed than after the material arrives.
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 $15,000?
$20,000 at 15 percent overhead and 10 percent profit, a 33.3 percent markup on cost.
How long should a quote stay valid?
Thirty days is normal and fourteen is defensible when material prices are moving. Put the expiry date on the proposal itself and back the large material lines with a written supplier quote.
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.
The overhead and profit calculator takes any dimensions you like and hands back the same list.