Overhead rate calculator

Work out your overhead rate and what it adds to every billable hour, so quotes cover the business and not just the job.

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Overhead rate40.0%Overhead as a percent of direct labor
Overhead per billable hour$20.00/hr
Direct labor per billable hour$50.00/hr
Break-even hourly rate$70.00/hrBelow this you lose money on every hour sold
How this is calculated

Overhead rate = annual overhead / annual direct labor cost. Overhead per hour = annual overhead / annual billable hours. Break-even rate = direct labor per hour + overhead per hour, before any profit.

Frequently asked
What belongs in overhead?

Costs that exist whether or not a specific job runs: rent, admin and management salaries, software, insurance, vehicles, marketing. Anything you can attribute to one job is direct cost, not overhead.

Why divide by billable hours and not all hours?

Because only billable hours generate revenue to absorb the overhead. Dividing by all hours understates what each sold hour has to carry and quietly produces rates that never recover the business costs.

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