What is a normal overhead rate for a construction subcontractor?

Most commercial subcontractors run overhead rates between 9% and 22% depending on trade and revenue level. Equipment-heavy trades like civil, excavation, marine, and tunnel run higher — 14 to 22% at the $1M–$5M band — because fleet management and depreciation add to fixed costs. Labor-intensive trades with smaller office footprints like concrete flatwork, framing, painting, and flooring run leaner at 13 to 16%. Overhead drops at higher revenue bands as fixed costs spread over a larger revenue base. The CFOS target is 9 to 13% for most trades.

How do you calculate overhead rate for a construction subcontractor?

Overhead rate equals total overhead costs divided by projected annual revenue. Overhead includes rent, utilities, owner salary at market rate, office staff and benefits, software, professional services, business taxes, and non-field vehicle costs. It does NOT include direct job costs like field labor, materials, or equipment working on specific jobs. Always use projected current-year revenue — not last year's actual.

Why does overhead rate decrease at higher revenue levels?

Fixed overhead costs — rent, office staff, owner salary, software — do not grow proportionally with revenue. A subcontractor with $1.2M in overhead doing $10M revenue runs a 12% rate. The same overhead structure at $5M produces a 24% rate. As revenue grows against a stable or slowly growing fixed cost base, the overhead rate drops. This is why every trade in the benchmark table shows lower overhead at higher revenue bands.

What overhead costs do construction subcontractors most commonly miss?

Owner salary at market rate — not what you actually pay yourself. Office staff benefits. Software subscriptions. Professional services including accounting and CFO fees. Business taxes and licenses. Non-field vehicle costs. A slow-season reserve for months when revenue drops but fixed costs do not. Most subcontractors are missing 20 to 35 percent of their real overhead in the calculation, which means the rate going into every bid is understated.

Overhead Rate Benchmarks — 46 Trades — 7 Revenue Bands

WHAT IS A NORMAL
OVERHEAD RATE FOR
YOUR TRADE?

Most subcontractors calculate overhead once a year and use a number nobody fully trusts. Here’s the benchmark data — 46 trades, 7 revenue bands. Enter your revenue to see what every rate means in real dollars.

Overhead rates across commercial subcontracting trades range from 7% at the low end (painting, flooring at $500M+) to 22% at the high end (marine, tunnel, elevator at $1M–$5M). For most subcontractors doing $1M–$12M, industry averages sit between 15% and 21% depending on trade. The CFOS target is 9–13% — the gap between industry average and CFOS target is almost always fixed costs that haven’t been reviewed, owner salary not priced at market rate, or revenue that hasn’t caught up to the overhead structure yet.

Published: May 2026Updated: May 202646 Trades — 322 Data Points

Trades Covered

Revenue Bands

9–13%

CFOS Target Range

322

Data Points

Free Access — 46 Trades — All 7 Revenue Bands

The Numbers Are Right There.

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Your Annual Revenue — type or slide to see real dollar values

$ Million

$1M$3M$5M$10M$25M$50M$100M+

1% Overhead Equals

$30,000

per year at your revenue

Industry Average Overhead at Your Revenue

$540,000

based on 18% avg across all trades

Each 1% You Reduce Adds

$30,000

directly to your net profit

Why overhead rate matters more than almost anything else: a subcontractor using a 10% overhead rate in their estimate when the actual rate is 18% is pricing every bid 8 points below cost. On $5M of revenue that’s $400K of margin given away annually — not because the work is priced wrong, but because the number going into the estimate is wrong. Every 1% reduction in overhead rate goes directly to net profit. Read: why overhead rate is wrong by design →

Overhead Rate — Industry Benchmarks — By Trade and Revenue Band

Trade	$1M–$5M	$5M–$10M	$10M–$25M	$25M–$50M	$50M–$100M	$100M–$500M	$500M+

Dollar values show what that overhead rate costs annually at your revenue. SPM = one of 18 trades SPM serves directly. Overhead rate = total overhead ÷ revenue — goes DOWN as revenue grows

WHAT IS A NORMALOVERHEAD RATE FORYOUR TRADE?

IS YOUR OVERHEADIN RANGE?

WHAT IS A NORMAL
OVERHEAD RATE FOR
YOUR TRADE?

IS YOUR OVERHEAD
IN RANGE?