OVERHEAD RATE FOR ELECTRICAL CONTRACTORS — WHAT IT SHOULD BE.
The target overhead rate for electrical contractors doing $2M–$8M is 11–15% of revenue. Most are running higher without knowing it because the rate has never been formally calculated — or owner salary is not included at market rate. Every point of gap between bid rate and real rate is unrecovered overhead coming directly out of net profit on every project.
Overhead rate is not a number you guess at or borrow from a trade association chart. It is calculated from your specific fixed costs divided by your specific revenue. The benchmark range gives you a target. Your real number tells you whether you are on track, elevated, or structurally underpricing every bid you submit.
WHAT OVERHEAD SHOULD LOOK LIKE FOR ELECTRICAL CONTRACTORS.
These benchmarks apply to commercial electrical subcontractors doing $1M–$12M. The range tightens as revenue scales — a $1.5M contractor may run 14–16% overhead as fixed costs are spread over a smaller revenue base, while an $8M contractor should be in the 11–13% range.
THE LINE ITEMS THAT PUSH ELECTRICAL OVERHEAD ABOVE TARGET.
Estimating Department Cost
Commercial electrical contractors at $2M+ typically have a dedicated estimator or the owner spends 30–40% of their time estimating. When the owner estimates, that time cost belongs in overhead. A market-rate estimator at $90,000–$130,000 per year is a significant overhead line many electrical contractors absorb informally rather than calculating explicitly.
Material Management and Procurement
Electrical contractors manage significant material logistics — purchase orders, supplier relationships, tracking, returns. On a $5M electrical book with $1.5M–$2M in annual material spend, the project coordinator spending 40% of their time on material management belongs in overhead at that proportional rate.
Vehicle Fleet for Journeymen
Commercial electrical contractors often provide vehicles for lead journeymen or vehicle allowances. Fleet costs for vehicles not directly charged to projects belong in overhead. On a 15-person crew with four company vehicles not job-costed, vehicle overhead can run $40,000–$70,000 annually.
THE CALCULATION — ONE SITTING, REAL NUMBER.
The interactive calculator: The CFOS overhead rate calculator walks through every line item category and produces your real overhead rate in about 10 minutes. Use it at constructioncfo.net/construction-overhead-rate-calculator-interactive
FREQUENTLY ASKED.
