Overhead and Profit on a $175,000 Job
Price the job at
$233,333.33
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, equipment175000 $
- Overhead recovery15 %
- Profit you want to keep10 %
Price the job at$233,333.33
| Direct job cost | $175,000.00 |
|---|---|
| Overhead recovered at 15% | $35,000.00 |
| Profit at 10% | $23,333.33 |
| Price | $233,333.33 |
| Markup this equals | 33.3% |
| If you had added the percent to cost instead | $218,750.00short by $14,583.33 |
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% | $218,750.00 | 25% | $210,000.00 |
| 15% | $233,333.33 | 33.3% | $218,750.00 |
| 20% | $250,000.00 | 42.9% | $227,500.00 |
| 25% | $269,230.77 | 53.8% | $236,250.00 |
What else matters here
A $175,000 cost prices at $233,333.33, recovering $35,000 of overhead and earning $23,333.33 of profit.
Contracts of this size start asking for bonds, and a bond is a job cost, not overhead. Payment and performance bonds are commonly quoted as a percentage of the contract value and are written for this specific project, so the premium goes in the estimate as a line and carries overhead and profit like any other cost.
Insurance splits the other way. The general liability and workers compensation policies run whether this job exists or not, so they are overhead, already inside the fifteen percent. What is not already in there is a one off: a higher limit demanded by this owner, an umbrella policy bought to satisfy this contract, a builder's risk policy, or an additional insured endorsement with a fee attached. Those were caused by the job and belong in the cost.
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 $175,000?
$233,333.33 at 15 percent overhead and 10 percent profit, a 33.3 percent markup on cost.
Is a bond premium overhead or a job cost?
A job cost. A payment or performance bond is written for that specific contract, so the premium goes in the estimate and carries overhead and profit. Your general liability and comp policies are overhead.
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.