Overhead
Overhead is the cost of running your business that isn't tied to one job — truck, tools, office, insurance, admin — recovered by adding it to every bid.
Overhead has to be paid whether or not you win a job, so it's spread across the work you do win, usually as a percentage added to direct costs (the overhead recovery rate). Forgetting to bake overhead into bids is a quiet way to run busy but broke.
Related terms
- Labor burden — Labor burden is everything you pay on top of a worker's wage — payroll taxes, workers' comp, benefits, and overhead — so the true cost of an hour is usually 25–40% above the wage.
- Markup — Markup is profit measured against your cost — the percentage you add on top of cost to get your price.
- Net profit — Net profit is what's left after all costs — direct job costs plus overhead and operating expenses — i.e., the actual bottom line.