Overhead

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The costs of running the business that are not tied to one job: truck, insurance, phone, software, tools, licenses.

Overhead is everything you pay whether or not you worked today. It has to be recovered across the jobs you do, which means it lives inside your hourly rate or your markup. A contractor who prices labor at what they want to take home, with no overhead in it, is paying the truck out of their own wages.

Add up a month of overhead, divide by the hours you can actually bill in a month, and that is the overhead per billable hour. It belongs in the rate.

Related: Labor rate · Markup · Margin

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