OWNER DRAW VS SALARY, WHAT GOES IN YOUR OVERHEAD RATE.
Owner salary belongs in SG&A as a fixed expense at market rate. Owner draws are distributions of net profit and don't belong in SG&A. When an owner books $70,000 in salary but takes $180,000 in total draws, the overhead rate is calculated on $70,000, and the other $110,000 comes out of net income that should have been retained as cash. Every bid is underfunded by the difference between market-rate salary and actual booked salary divided by revenue.
This is the most common single reason an overhead rate is too low, and it's also the easiest one to correct, because nothing about how the business operates has to change. The owner is covering the GM job, the estimating job, and the business development job. If three employees filled those roles, the salaries would be in SG&A without anybody debating it, and the bid rate would include them. Booking the owner at $70,000 doesn't make the work cheaper. It moves the cost out of the bid and into whatever happens to be left at year end.
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WHAT IT MEANS.
Owner salary is a fixed compensation expense booked to SG&A that is paid regardless of profitability, and an owner draw is a distribution of net profit taken after all expenses including that salary are covered.
Most construction owners take draws when cash is available and book a minimal salary. The overhead rate gets calculated on the salary, and the draws come out of net profit. That split is why a bid rate can be short by tens of thousands of dollars a year without anybody making a single accounting error.
WHERE THE OVERHEAD RATE BREAKS.
Salary booked at minimum to reduce payroll taxes
Many owners structure compensation as a minimal W-2 salary plus draws to reduce payroll tax exposure. The overhead rate then gets calculated on the W-2 salary while the draws come out of net profit. Every bid is underfunded by the difference between minimum salary and market rate salary, because the overhead rate doesn't reflect what the owner's role really costs the business to fill.
Draws vary with cash availability
Owner draws taken when cash is available and cut back when cash is tight produce owner compensation that moves around every month. The overhead rate then changes month to month based on draw timing rather than holding still as a fixed cost. A stable market-rate salary booked monthly is the only structure that produces an accurate and consistent overhead rate calculation.
Market rate never established
Many owners have never compared their own compensation against the market rate for the role they fill. At $3M to $8M in revenue the owner typically covers GM, estimator, and business development all at once, and market rate for that combination is $120,000 to $180,000. If $70,000 is what is in SG&A, the overhead rate is understated by $50,000 to $110,000 per year divided by revenue.
WHAT IT LOOKS LIKE IN DOLLARS.
When an owner books $70,000 in salary but takes $180,000 in total draws, the overhead rate is calculated on $70,000, and the other $110,000 comes out of net income that should have been retained as cash. At $3M to $8M in revenue, where market rate for the combined role is $120,000 to $180,000, the rate is understated by $50,000 to $110,000 a year divided by revenue. That understatement is in every bid the business submits.
At $1M to $3M in revenue, market rate for the owner's role is $90,000 to $130,000. At $3M to $8M it's $120,000 to $180,000. Those are the figures the overhead rate should be built on, whatever the owner chooses to take home in cash that month.
RESEARCH FROM OTHER SOURCES.
These figures come from another company's survey, not from SPM's clients. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found 22 percent of owners regularly drew profit in addition to their salary in 2025, compared to 26 percent in 2024.
Source: Billd, 2026 National Subcontractor Market Report, page 19 (survey of 623 respondents, published May 13, 2026).
WHAT CHANGES IN 60 DAYS.
The market rate for the owner's role at your revenue level goes into SG&A as a fixed monthly expense, regardless of what cash is available that month. Every analysis of the overhead rate is built on that number, so it has to stay consistent. At $3M to $8M in revenue the market rate is $120,000 to $180,000 a year, and at $1M to $3M it's $90,000 to $130,000.
SG&A including the corrected owner salary divided by revenue is the real overhead rate. Compare that to what is in the bid model, and the difference is what recent bids have been short. The bid model gets updated immediately rather than at year end.
Owner distributions are a use of net profit, so they come after all overhead including market-rate owner salary is covered. The business covers SG&A including the owner's salary, generates net income, and then the owner takes distributions out of that net income. When distributions come out before overhead is covered, the business is cash-negative even while it looks profitable on the P&L.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
Built for subs doing $1M to $12M. Above $12.5M we quote.
| Last 12 months revenue | Core | Strategic | Platinum | One-time onboarding |
|---|---|---|---|---|
| Under $1M | $1,900 | $3,100 | $3,300 | $2,500 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $4,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $6,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $7,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $9,000 |
| Above $12.5M | Quoted | Quoted | Quoted | Quoted |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers, and it moves with your revenue band. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Just want the setup? Onboarding only is the same onboarding work with no monthly service after it, one time, at the onboarding fee plus $2,000. Start a monthly engagement later and $2,000 counts toward it. It starts at $4,500, and the price for every band is on the pricing page.
The three tier columns are the whole price. Which one fits depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
- Online software only: QuickBooks, Sage, Viewpoint and similar. No VPN or hosted desktop.
- Not in any tier: payroll, pay applications, collections on receivables.
- Pricing valid through 2027.
CFO work. Your own bookkeeper keeps doing the books.
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You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
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Core, plus bookkeeping and bank reconciliations, plus job costing and WIP software set up and managed for you. Use your own online accounting software or we supply it, one price.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
Strategic, plus a controller who handles payables and receivables the way an in-house controller would. You approve every payment.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
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