Overhead and Profit on a $150,000 Job
Price the job at
$200,000.00
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, equipment150000 $
- Overhead recovery15 %
- Profit you want to keep10 %
Price the job at$200,000.00
| Direct job cost | $150,000.00 |
|---|---|
| Overhead recovered at 15% | $30,000.00 |
| Profit at 10% | $20,000.00 |
| Price | $200,000.00 |
| Markup this equals | 33.3% |
| If you had added the percent to cost instead | $187,500.00short by $12,500.00 |
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% | $187,500.00 | 25% | $180,000.00 |
| 15% | $200,000.00 | 33.3% | $187,500.00 |
| 20% | $214,285.71 | 42.9% | $195,000.00 |
| 25% | $230,769.23 | 53.8% | $202,500.00 |
What else matters here
A hundred and fifty thousand of cost prices at $200,000. Overhead recovery is $30,000 and profit is $20,000.
A job this size runs long enough to have general conditions, and general conditions are job costs rather than overhead. Supervision time on this site, the dumpster and its swaps, the portable toilet, temporary power and water, site protection, fencing, the storage container, deliveries, cleanup and final cleaning all exist only because this job exists.
Left out of the cost, they come out of the profit, and on a four month job they add up faster than anyone expects. Put them in the estimate as their own section with a line for each and a duration against it, because the moment the schedule slips, general conditions are the cost that slips with it. That is also the number to reach for when a customer asks what a delay actually costs.
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 $150,000?
$200,000 at 15 percent overhead and 10 percent profit, a 33.3 percent markup on cost.
Are supervision and dumpsters overhead or job cost?
Job cost. They exist only because this job exists, so they belong in the cost and carry overhead and profit. Estimate them as their own section with a duration against each line.
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.