HOW MUCH SHOULD A CONSTRUCTION OWNER PAY THEMSELVES SALARY, DRAWS, AND THE OVERHEAD RATE.
The most common answer to this question is whatever the business can afford after everything else is paid. That's the wrong framework. Owner compensation should be treated as a defined cost of operating the business: a fixed salary in the overhead rate that every bid recovers, plus draws from net profit that represent return on equity. When owner compensation isn't in the overhead rate, every bid is underpriced by the cost of the owner's labor.
The two halves do different jobs, which is why splitting them fixes two problems at once. The salary is a cost, so it belongs in the overhead rate and gets recovered on every job you bid, whether the year is good or bad. The draw is a distribution of profit, so it's variable and comes out after everything else is covered. Owners who take only draws end up with a bid rate that understates the cost of operating the company and a personal income that changes with the worst month of the year. Neither of those is necessary.
WHAT IT MEANS.
Owner compensation is a defined cost of operating the business, made up of a fixed salary that is included in the overhead rate and draws taken from net profit as a return on equity.
Net profit before owner compensation isn't a meaningful measure of business profitability. Until a market rate wage for the owner's own labor is inside the costs, the profit figure includes the value of work somebody is doing for free.
WHERE OWNER PAY BREAKS THE NUMBERS.
Owner salary isn't in the overhead rate
When the owner takes draws instead of a defined salary, the overhead rate is missing the largest single overhead line in the business. A $3M subcontractor whose owner is doing project management, estimating, business development, and financial management is worth $150,000 to $200,000 in compensation at market rate for those functions. If the overhead rate doesn't include that number, every bid is understating overhead by 5 to 7 percent of revenue, and it has been for as long as the rate has been in use.
The profit number includes free labor
Net profit before owner compensation isn't a meaningful measure of how profitable the business is. A business that generates $400,000 after paying a $40,000 draw isn't generating $400,000 in surplus. If the owner's market rate is $200,000, it's generating $200,000. Every decision made off the larger number, from bidding to hiring to buying equipment, is being made on a figure that overstates what the business earns.
The owner is financing the business with deferred pay
If you aren't paying yourself market rate and the business looks profitable, you're subsidizing it out of compensation you never took. That's a real loan, it just doesn't appear anywhere on the balance sheet. It also keeps the problem unseen, because the P&L reads fine right up until you try to hire somebody to do what you've been doing for nothing.
WHAT IT LOOKS LIKE IN DOLLARS.
A $1M to $2M subcontractor owner operator should be at $80,000 to $120,000. A $2M to $5M owner operator managing 5 to 15 crew should be at $120,000 to $160,000. A $5M to $10M owner managing a PM team should be at $150,000 to $200,000. At $12M in SPM's target financial model the figure is a $180,000 fixed salary plus draws.
A $180,000 salary is in overhead and draws come out of net profit on top of it. At the CFOS target of 12 percent net profit before taxes, on $12M in revenue, that's $1,440,000 in net profit before draws. At the 6.3 percent net income before taxes CFMA's 2024 Construction Financial Benchmarker reports across all respondents, the same $12M produces $756,000, so holding the target is worth $684,000 a year to the owner on identical revenue. The salary is recovered through the bid rate on every job, and the $1,440,000 is what the equity earned.
On a $3M subcontractor, an owner worth $150,000 to $200,000 who is missing from the overhead rate means every bid understates overhead by 5 to 7 percent of revenue. That difference decides whether a bid covers the business or borrows from it. Correcting the rate is usually the largest single adjustment a subcontractor's overhead calculation needs.
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).
THREE STEPS THAT FIX THE OVERHEAD RATE AND THE PERSONAL FINANCE QUESTION AT ONCE.
Base it on what it would cost to hire somebody to do what you do, across all of the functions you cover. That number goes into the overhead rate as a fixed line, which means it's included in every bid and paid every month regardless of how the business performed. It's your baseline compensation for operating the company rather than a reward for a good quarter.
Draws are distributions of profit, so they're a return on equity rather than payment for labor. They're variable, they get distributed when the cash position and the tax planning support it, and they never belong in the overhead rate. Keeping the two separate is what lets you tell whether a good year came from the business or from underpaying yourself.
The overhead rate that was understating owner compensation gets corrected, and the bid rate updates with it. Future projects then price the cost of your involvement correctly, which is the whole point of the exercise. Existing contracts are unaffected, so the correction works its way through as the backlog turns over.
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.
You stop guessing.
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.
Your bookkeeper still does the books.
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.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
