Grounds ToolkitBusiness Profitability
What Does Business Overhead Add to Every Billable Hour?
Enter annual overhead costs and billable hours. This shows the overhead added to every hour, and combines it with your loaded labor rate if you enter a wage.
Want to learn more?
- GuideThe Loaded Labor Rate GuideA $20 wage is not a $20 cost. This guide shows what burden actually pays for, and why pricing off the wage instead of the loaded rate quietly loses money on every job.
- GuideThe Break-Even Revenue GuideBreak-even is not the goal, it is the floor. This guide shows the revenue a crew needs just to cover its costs, and the larger number it actually needs to hit a real margin.
How this is calculated
Overhead per hour is annual overhead divided by annual billable hours. If a wage is entered, it combines with the loaded labor rate (see Loaded Labor Rate) into a fully loaded billable rate, wage plus burden plus overhead, before any profit margin.
Worked example
$220,000 in annual overhead across 9,000 billable hours is $24.44 added to every hour. Combined with a $28.60 loaded labor rate (a $22 wage at 30% burden), the fully loaded billable rate is $53.04 per hour, before margin.
Guide: The Loaded Labor Rate Guide, the labor-cost half of what an hour really costs the business.
Guide: The Break-Even Revenue Guide, how this per-hour figure rolls up into a whole-week revenue floor.
Frequently asked questions
How is overhead different from labor burden?
Labor burden (see Loaded Labor Rate) is payroll taxes, workers compensation, and paid time off, tied directly to a wage. Overhead here is business-level fixed costs, rent, admin salaries, marketing, general insurance, and software, that exist regardless of any one employee's wage.
Should I include equipment cost in overhead?
No, equipment ownership has its own engine, see Equipment Hourly Cost. Including it here as well would double-count it.
What are annual billable hours?
The total hours across your whole crew that actually get billed to customers in a year, not total paid hours. If crew members have non-billable time, see Productive vs Paid Hours to estimate the billable portion first.
What does the fully loaded billable rate include, and what does it exclude?
It includes wage, labor burden, and overhead. It does not include profit margin, that is a separate decision, see Required Revenue per Crew-Hour to add a target margin on top.