Overhead and Profit on a $20,000 Job
Price the job at
$26,666.67
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, equipment20000 $
- Overhead recovery15 %
- Profit you want to keep10 %
Price the job at$26,666.67
| Direct job cost | $20,000.00 |
|---|---|
| Overhead recovered at 15% | $4,000.00 |
| Profit at 10% | $2,666.67 |
| Price | $26,666.67 |
| Markup this equals | 33.3% |
| If you had added the percent to cost instead | $25,000.00short by $1,666.67 |
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% | $25,000.00 | 25% | $24,000.00 |
| 15% | $26,666.67 | 33.3% | $25,000.00 |
| 20% | $28,571.43 | 42.9% | $26,000.00 |
| 25% | $30,769.23 | 53.8% | $27,000.00 |
What else matters here
A $20,000 cost prices at $26,666.67. Overhead recovery is $4,000 and profit is $2,666.67.
Permits, inspection fees, dump fees and engineering are job costs and belong in the $20,000, which means they carry overhead and profit like everything else. Pulling a permit takes your time, ties up your license and puts your name on the job, and passing it through at exactly what the county charged pays you nothing for any of that.
Sales tax is the one that works differently. Where the contractor is the end user of the material, tax paid at the supply house is part of the material cost and goes in with it. Where the state treats the sale to the customer as taxable, the tax is collected on top of the price and never marked up, because it was never yours. The rule is a state rule and it is worth knowing which side of it your work falls on before you write a proposal.
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 $20,000?
$26,666.67 at 15 percent overhead and 10 percent profit, a 33.3 percent markup on cost.
Do permits and dump fees carry overhead and profit?
Yes. They are job costs, they consume your time and your license, and passing them through at cost pays you nothing for handling them. Sales tax is different and is handled by state rule.
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.