Overhead Recovery Rate Calculator
Overhead does not go away just because you did not put a number on it. Enter your annual overhead and billable hours and get the overhead cost per billable hour — the number that has to be added to every hour you bill, on top of labor and profit. The math updates as you type.
Overhead Recovery Rate Calculator
Enter your total annual overhead and the hours you actually bill out in a year.
This is overhead only. It must be added to your labor cost and desired profit per hour to get your true billing rate — it is not a rate on its own.
How to calculate your overhead recovery rate
Overhead is every dollar that keeps the business running but is not tied to a specific job — rent, insurance, office staff, software, vehicles, marketing. It has to be recovered across your billable hours, or every job you do quietly loses money.
| Step | Example: $60,000 annual overhead, 1,250 billable hours |
|---|---|
| Total annual overhead | $60,000 |
| Billable hours per year | 1,250 hours |
| Overhead per billable hour | $60,000 ÷ 1,250 = $48.00/hour |
Billable hours are almost always fewer than total working hours — drive time, estimating, admin, callbacks, and slow weeks all eat into the hours you can actually invoice. A crew that works 2,080 hours a year but only bills 1,250 of them still has to recover the full $60,000 across those 1,250 hours, not 2,080.
Contractor Estimate Calculator (Excel & Google Sheets)
Bake overhead, labor, and profit into every estimate automatically — no more guessing whether a bid actually covers the lights being on.
Overhead is not your hourly rate
This number is one ingredient, not the finished recipe. Your true billing rate is labor cost + overhead recovery + profit margin, stacked on top of each other. Skip the overhead step and you are pricing jobs as if rent, insurance, and the office were free — and a business can look busy and profitable on paper while quietly bleeding cash every month.
Put it together with the rest of your rate
Once you know the overhead line, calculate your full labor burden rate to see the true cost of an employee-hour, then run both through the true hourly rate calculator to land on what you should actually charge.
Frequently asked questions
What is overhead recovery rate?
It is your total annual overhead divided by your billable hours — the dollar amount that must be added to every billable hour to cover rent, insurance, admin, and other costs not tied to a specific job.
What counts as overhead for a contractor?
Rent or shop costs, insurance, office staff wages, software, vehicles not assigned to a job, marketing, and licensing. It excludes direct job costs like materials and on-site labor, which are priced per job.
Why are billable hours less than total working hours?
Drive time, estimating, admin work, callbacks, training, and slow periods are all paid or unpaid time that is not billed to a client. A crew may work 2,000+ hours a year but only bill 1,200 to 1,400 of them.
Is this overhead recovery calculator free?
Yes — free, no sign-up. Enter your annual overhead and billable hours and read the overhead cost per hour. This must still be added to labor cost and profit to reach your billing rate.