RHACOVA

Free contractor tool

Overhead Recovery Calculator

Rent, insurance, software, the truck payment and the phone get paid out of job revenue. This spreads a year of those costs over the basis you choose, so every job carries its share.

Your overhead

The fields start with example figures so the math is visible on first visit. Replace them with the totals from your own books — these are not benchmarks.

Period entered

Office rent, insurance, admin wages, software, vehicles, marketing, accounting — everything not charged directly to a job.

Recovery basis

Hours your crew can actually charge to jobs, not hours paid.

Your result

Overhead per productive hour$22.94
Total overhead per yearMonthly amount × 12$78,000.00
Recovery basis3,400 productive hours per year

This is a recovery basis, not a rule. Recovering overhead per hour and recovering it as a percentage of cost give different answers on the same job, and neither is universally correct — pick the one that matches how your work is sold.

Why this number?

overheadPerProductiveHour = annualOverhead / productiveHoursPerYear

Inputs

annualOverhead
$78,000.00
Productive hours per year
3400
basis
per_productive_hour

Results

overheadPerProductiveHour
$22.94

Formula overhead.perProductiveHour · engine shared.overhead@1.0.0 · recovery-and-hourly-rate · rounding half-even to 2 decimals.

Your Numbers stores overhead recovery as a percentage of direct cost. A dollars per hour figure has no matching field yet, so nothing is offered for saving here — switch the basis above if you want to store it.

Keep this number where your pricing can use it

Review it in Your Numbers alongside your labor rate and target margin. Nothing is saved until you confirm it there.

Open Your Numbers

What counts as overhead

Overhead is every cost that keeps the company running but cannot be charged to one job: office rent, general liability insurance, the estimator's salary, accounting, software, marketing, vehicle payments, phones. Material on a job is not overhead. A dump fee on a job is not overhead. If you can point to the job that caused the cost, it is a direct cost.

Two honest recovery bases

Overhead has to come back to you through the work you sell, and there is more than one defensible way to spread it:

  • Per productive hour — overhead ÷ billable field hours per year. Fits labor-driven work where hours, not material, drive the business.
  • Percent of direct cost — overhead ÷ annual direct job cost. Fits material-heavy work, where a big material job consumes more of the company than its hours suggest.

RHACOVA does not declare a winner. The calculator shows the basis it used next to the answer so the number is never quoted without its assumption.

The formulas this calculator uses

  • Annual overhead = monthly overhead × 12 (or the annual figure as entered)
  • Overhead per productive hour = annual overhead ÷ billable field hours per year
  • Overhead recovery rate = annual overhead ÷ annual direct job cost

Overhead recovery is cost recovery, not profit. Recovering 100% of your overhead leaves you at break-even — profit is added after, with a markup or a target margin.

Worked example: the same overhead, two bases

$6500 of overhead a month is $78,000.00 a year. A company delivering 3400 billable field hours and running $420000 of direct job cost sees:

  • Per productive hour: $22.94 of overhead in every billed hour
  • Percent of direct cost: 18.57% on top of the direct cost of a job

Both recover the same yearly overhead. They land differently on an individual job, which is exactly why the basis has to be stated.

Common mistakes

  • Dividing overhead by paid hours instead of billable hours. Overhead can only be recovered on hours a customer pays for.
  • Counting your own field wages as overhead and again as job labor. Pick one and be consistent.
  • Treating the recovery rate as profit. Full recovery means break-even, nothing more.
  • Using last year's overhead with this year's volume. Both sides of the division have to come from the same period.
  • Quoting a recovery number without its basis. “12%” and “$22 an hour” are not comparable figures.

Related decisions

Learn the method