Contractor financial utility

Know your overhead before you call a job profitable.

Calculate the revenue your company needs to cover overhead, then test a specific job to see what remains after direct costs, allocated overhead and estimated B&O tax.

1. Business break-even revenue

Enter your recurring monthly overhead and expected gross margin. Results update automatically as you type. Break-even revenue is the sales volume required for gross profit to cover that overhead.

Monthly overhead

Expected gross margin (%)

What can monthly overhead include?

Office/admin payroll, rent or shop space, general liability and commercial auto insurance, software, phones/internet, advertising, accounting, vehicle expenses not charged directly to a job, licensing/subscriptions, and owner or management salary not counted as direct field labor.

Do not include direct job costs such as materials, job-specific field labor, subcontractors, permits, or equipment rented specifically for a project.

Rule of thumb: If a job disappeared tomorrow and you would still have to pay the expense, it is probably overhead.

Monthly break-even revenue—

Annual break-even revenue—

Gross profit needed each month to cover overhead—

Formula: break-even revenue = overhead ÷ gross-margin percentage. This assumes gross margin is measured before overhead.

2. Test a specific job after overhead

Use your normal monthly revenue to convert overhead into a revenue percentage. The calculator allocates that share of overhead to this job, then subtracts direct costs and estimated B&O.

Job selling price before sales tax

Direct job costs

Need a loaded employee labor cost? Use the Labor Burden Calculator.

Normal monthly revenue before sales tax

Estimated B&O rate

Overhead as % of revenue—

Allocated overhead to this job—

Estimated B&O—

Estimated profit after direct costs, overhead & B&O—

Estimated profit margin after overhead & B&O—

Not net profit: this estimate does not include income tax, debt principal, owner distributions, unusual one-time expenses, or costs not entered in the calculator.

3. What should you charge for a target profit margin?

This calculation uses the overhead percentage from your monthly overhead and normal monthly revenue, plus the selected B&O rate.

Direct job costs

Target profit margin after allocated overhead & B&O (%)

Required selling price: —

This is an operating planning estimate. It does not include income tax, debt principal, owner distributions, unusual one-time expenses or every project-specific tax and cost.

What counts as overhead?

Overhead usually includes costs the business must pay whether or not a specific job is underway: office payroll, rent, software, vehicles not charged directly to a job, general insurance, advertising, accounting, phones, administrative wages and similar recurring expenses.

Direct costs belong to the job itself: materials, field labor, subcontractors, equipment specifically rented for the project and other costs that disappear if the job does not happen.

Important: allocated overhead is a management estimate, not a tax deduction calculation. A company with seasonal sales, rapidly changing overhead or unusual project mix may need a more detailed costing method.

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