OVERHEAD TOOLS · INTERACTIVE CALCULATOR

CONSTRUCTION OVERHEAD RATE CALCULATOR.

QUICK ANSWER

Your overhead rate is total annual fixed costs divided by annual revenue — expressed as a percentage. Most subcontractors at $2M–$8M are running 18–28% overhead while bidding at 10%. That gap is the reason every job underperforms the estimate. Enter your actual numbers below and see your real rate in 60 seconds.

The 10% overhead rule exists because someone wrote it in a textbook 40 years ago for general contractors running $50M+ in volume. At $3M in revenue with an office, two trucks, insurance, software, and a field superintendent on salary, 10% is not your overhead rate. Your overhead rate is whatever your actual fixed costs are divided by your actual revenue. This calculator runs that math so you know the real number before you bid another job.

BY JOSH LUEBKERPublished: May 2026Updated: May 2026

THE CALCULATOR

ENTER YOUR NUMBERS — SEE YOUR REAL OVERHEAD RATE.

REVENUE

Annual Revenue (trailing 12 months)

STAFFING OVERHEAD (office and management — not field labor)

Owner salary (market rate — not what you actually pay yourself)

Office staff / admin (total compensation)

Project manager(s) — office overhead portion

Accounting / bookkeeping (outsourced or in-house)

FACILITIES AND EQUIPMENT

Office rent / mortgage

Yard / storage / lay-down area

Company vehicles (not job-costed to projects)

General equipment maintenance (overhead portion)

INSURANCE AND BENEFITS

General liability insurance (annual)

Health insurance — office staff (employer portion)

Workers comp — office staff (not field)

SOFTWARE AND SERVICES

Accounting / job costing software (ControlQore, QB, etc.)

Estimating software

Telecom, internet, phones

IT support, website, other services

OTHER FIXED COSTS

Business taxes, licenses, dues

Marketing, advertising, bid costs

Training, certifications, continuing education

Other fixed overhead (bank fees, legal, misc)

WHAT THE NUMBER MEANS

HOW TO USE YOUR OVERHEAD RATE IN EVERY BID.

STEP 01 — VERIFY THE NUMBER

Does This Match What You Thought?

Most subcontractors run this calculator and find their real overhead rate is 15–28% when they assumed 10%. That gap is not an accounting problem — it is a bidding problem. Every job bid at 10% when your real rate is 20% is losing 10 points of net margin before the crew leaves the yard. The calculator does not lie. If the number surprises you, the number is correct.

STEP 02 — APPLY IT TO EVERY BID

Update Your Estimating Template

Your overhead rate goes into your estimating template as a fixed percentage applied to every bid. Not a judgment call — a formula. Direct cost + overhead at your real rate + profit margin = bid price. If that bid price is not competitive in your market, the answer is to cut overhead costs — not to bid at a lower overhead rate than reality. Bidding below your real overhead rate does not make you more competitive. It makes you a subsidized GC.

STEP 03 — UPDATE IT ANNUALLY

Recalculate Every Year

Your overhead rate changes every time a fixed cost changes. You hire an office manager — overhead goes up. You move to a bigger yard — overhead goes up. Revenue grows 30% — overhead rate goes down as fixed costs spread over more revenue. Run this calculator every January at minimum. Run it any time you add a significant new overhead cost. A rate that was accurate 18 months ago may be off by 4–6 points today.

TARGET RANGES

WHAT A HEALTHY OVERHEAD RATE LOOKS LIKE BY REVENUE BAND.

$1M – $3M

15–22%

Fixed costs are proportionally heavier at lower revenue — owner salary alone can be 8–12%

$3M – $8M

12–18%

Target range for most commercial subs — overhead begins scaling with revenue

$8M – $12M

9–14%

Target range — fixed costs spread over more revenue. CFOS target: 9–13%

If your overhead rate is above the target range for your revenue band: the fix is either cutting overhead costs or growing revenue faster than overhead. It is not bidding at a lower rate. Running jobs at below-overhead prices to stay busy makes the overhead problem worse — you work harder for less recovery per dollar of revenue.

COMMON QUESTIONS

FREQUENTLY ASKED.

Should I include my owner salary in overhead?

Yes — at a market rate. This is the most common mistake in overhead calculations. If you are not paying yourself a defined salary through overhead, your overhead is understated and your net profit is overstated. Use what it would cost to hire someone to do what you do — typically $120K–$180K for an owner-operator at $3M–$8M revenue. If you want to draw more than that, it comes from profit after overhead is fully covered.

What about field supervisor costs — do those go in overhead?

Field supervisors whose time is allocable to specific projects should be job-costed as a direct job expense — not overhead. A superintendent who runs one project goes to that project's job cost as direct job expense. A superintendent who floats across multiple projects or whose time cannot be cleanly allocated to a project goes to overhead. The rule: if it is specific to a project, job-cost it. If it is the cost of running the business regardless of which project is active, it is overhead.

How do I reduce my overhead rate if it is too high?

Two levers: cut costs or grow revenue. On the cost side — audit every line in this calculator. Is each cost producing value? Subscriptions that accumulated, vehicles that are not working, staff whose output does not justify the cost. On the revenue side — if revenue grows 25% with no new overhead added, your overhead rate drops proportionally. The fastest improvement is usually a combination: trim 2–3 non-essential overhead items and grow revenue into the existing overhead structure.

Josh Luebker

Fractional CFO · The Construction CFO

Former commercial construction project manager and master electrician. Managed 150+ projects totaling $300M+. Now fractional CFO for commercial subcontractors doing $1M–$12M. About Josh → | LinkedIn →

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