Turn your annual overhead into a per-hour rate so you can price jobs to actually cover your costs.
Your overhead rate turns the fixed cost of running the business into a dollar figure you can add to every billable hour. You total your annual overhead, everything that is not direct job material or direct field labour, then divide by your billable field hours in a year.
The result is a per-hour rate. Add it to your labour cost and markup so every hour a worker is on a job also pays down rent, trucks, insurance, software, and the office. Price without it and those costs quietly eat your margin.
Say your annual overhead is 120,000 dollars and you bill 4,000 field hours a year. Your overhead rate is 30 dollars per hour. Every estimated hour on a bid should carry that 30 dollars on top of the raw labour cost, before markup, or the job silently underpays the business.
There is no electrical code for overhead; this is business math, and it is where a lot of small contractors quietly lose money. Estimating labour and material precisely while guessing at overhead means the bid looks profitable and the year is not. A defensible overhead rate makes the difference visible on every line.
An overhead rate is your annual fixed business cost expressed as a dollar amount per billable field hour. You add it to direct labour so every job hour helps cover rent, vehicles, insurance, and office costs.
Total your annual overhead, everything that is not direct job material or field labour, then divide by your billable field hours in a year. The result is your overhead rate per hour.
Rent, vehicles and fuel, insurance, office staff, accounting, software, tools, marketing, and any other cost of running the business that is not tied to a specific job’s labour or material.
No. Overhead is a cost you recover, and markup is your profit on top. Folding overhead into markup makes it easy to discount away your own cost recovery in a competitive bid.