Overhead
Overhead is everything it costs you to be in business at all, whether or not you work today — insurance, your vehicle, tools, software, a phone line. Spread it across your jobs and build it into your price, or every job that looks profitable on paper quietly isn’t.
What it means
It’s easy to price a job off just the visible costs — materials and your time on site — and forget the costs that don’t show up on any single invoice. Insurance, fuel, tool replacement, a portion of your phone bill, an accountant once a year: none of that goes away on a slow week, and none of it gets paid unless it’s baked into what you charge.
A simple way in: add up a year of overhead, divide by the hours you expect to actually bill that year, and you get an overhead-per-hour number to add on top of your labor rate. Skip this step and a job that “made money” on paper can still leave you unable to cover the insurance bill in January.
Your yearly overhead — van, insurance, tools, phone — comes to $9,000. If you bill 900 hours a year, that’s $10 an hour you need to add to every job just to break even on overhead, before you’ve made a cent of actual profit.
Pricing a job off materials and labor alone and treating overhead as something that comes out of “profit” later — which works fine until a slow month makes it obvious there wasn’t any profit to take it from.
See also
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