Overhead

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laketime

Senior Member
I am using a new software program and it is asking for overhead as a percentage of a project. I an newer in business and don't have statistical data for that yet. What would be a good "ball park" number to put in there.
 

iMuse97

Senior Member
Location
Chicagoland
Your overhead is going to be very different from a company that maintains offices with estimators, bookkeepers, etc, and supply warehouse(s), and bucket trucks and truckmounted cranes, etc. BUT, it is still significant: I would ballpark it at a minimum of 30% of the job. You've got tools and a truck that take a beating. Gas costs are up. Try that and see how the program calculates the price.
 

satcom

Senior Member
I am using a new software program and it is asking for overhead as a percentage of a project. I an newer in business and don't have statistical data for that yet. What would be a good "ball park" number to put in there.

Your overhead and operating expenses are the cost of doing business, and this is a figure you should have from day one of opening your business You can not ball park your expenses they are real and true costs.
Someone on here had a link to a site that asks you questions and tells you what your break even cost is.
 

maghazadeh

Senior Member
Location
Campbell CA
Many bidding projects has limitations in the bidding document or specification how much they allow you to charge for overhead and profit. Most often we see those rates to be, 10% for overhead and 5% for profit.
 

laketime

Senior Member
Your overhead and operating expenses are the cost of doing business, and this is a figure you should have from day one of opening your business You can not ball park your expenses they are real and true costs.
Someone on here had a link to a site that asks you questions and tells you what your break even cost is.

I know my fixed costs I was just wondering how to break them down to a percentage of the total cost of a job....the overhead for that particular job.
 

satcom

Senior Member
I know my fixed costs I was just wondering how to break them down to a percentage of the total cost of a job....the overhead for that particular job.

Job costing is an accounting process, of your real and true costs, and it takes some time to put an accurate cost account together, but having all the actuals information is a great way to sharpen your bids.
 
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nhfire77

Senior Member
Location
NH
Many bidding projects has limitations in the bidding document or specification how much they allow you to charge for overhead and profit. Most often we see those rates to be, 10% for overhead and 5% for profit.

What? The customer dictates your overhead and profit??? Oh no thank you. If that were the case, why bother being is business. I guess very large firms that need to fill a schedule might do that.

Is this normal?
 

cdslotz

Senior Member
30% sounds way high.
All of the companies and estimating I have been doing for the past 30 years has consistently run 10-15%.
If the market will only allow 10%, you need to figure out how much work you need to sell to cover that.
So, if you add up all of your expenses (rent, office personnel, utilities, etc, etc) and that runs you $100K per year, then you need to sell $1 million/year just to cover OH.
 

brian john

Senior Member
Location
Leesburg, VA
Many bidding projects has limitations in the bidding document or specification how much they allow you to charge for overhead and profit. Most often we see those rates to be, 10% for overhead and 5% for profit.

I am not letting someone tell me what my overhead and profit should be. Typically in discussions with theses spec writers you will find they are idiots.

Had one contracting officer for the fed tell me I ran a business for 5 years and I used 10% and 10%. My answer seems to worked well you are working here now?
 

Chamuit

Grumpy Old Man
Location
Texas
Occupation
Electrician
This is kind of funny for the reasons mentioned here. When I worked for a John Deere & DDA dealer, they always said the minimum markup was 30% whether it was for overhead or profit. We usually did 65-80%

After all was said and done they usually netted 20 - 25%.
 

mivey

Senior Member
30% sounds way high.
Would you believe 210% ? It all depends on how you define your costs. Market Schmarket. Your real costs are your real costs and you should recover them or find some other way to make money.
 

Winning DUH

Member
Location
Midwest
I know my fixed costs I was just wondering how to break them down to a percentage of the total cost of a job....the overhead for that particular job.

This is simplified but for example if you only have two expenses cell phone (50/month) and gas (400/month).

50+400=450 overhead a month.

450/30 days = 15 dollars a day

You project is, I don?t know, three days?? 45 in overhead. Way way WAY over simplified.
 

GBBOLT

Member
Location
Trenton, Florida
Depends

Depends

I am the estimator at a small business here in Gainesville, we have 6 trucks on the road, 13 employees, and 3 full time offfice staff, which includes the Pres.,Myself, and the Office manager. Between the office staff, we make up 33% of our total payroll each week, and our payroll accounts for approx. 1/2 of our expenses each month. Our overhead figure has always been at 12-15% and we have never had a problem with excessive cost or lost money with this figure. It will change depending on expenses, but if your company figures are anywhere close to this, this number may be a good start.
 

jaylectricity

Senior Member
Location
Massachusetts
Occupation
licensed journeyman electrician
Who cares what the percentage is? If they say you can only charge 10% for overhead, then I guess the job is going to cost them 10 times whatever it is your actual overhead is.

Job is worth $1,000
Actual overhead is $200
10% of job is $100
What you must charge them to meet their guidelines: $2,000

That's $1000 in free money. :cool:
 

satcom

Senior Member
With this overhead post, it has me wondering where these crazy ideas come from, and why anyone would respond.
 

rodneee

Senior Member
With this overhead post, it has me wondering where these crazy ideas come from, and why anyone would respond.

these "CRAZY IDEAS" come from the expertise of businessmen who have interpolated their long term day to day findings to a percentage and/or a format which they could use to their advantage...as to "WHY ANYONE WOULD RESPOND" since many of the responses are all over the charts, i can only assume their intention was to point out that the standard "textbook" answers are not the ONLY answers that work...
 

satcom

Senior Member
these "CRAZY IDEAS" come from the expertise of businessmen who have interpolated their long term day to day findings to a percentage and/or a format which they could use to their advantage...as to "WHY ANYONE WOULD RESPOND" since many of the responses are all over the charts, i can only assume their intention was to point out that the standard "textbook" answers are not the ONLY answers that work...

Overhead is your true and real expense, and to respond to a bid that would limit that true account is not business, you can adjust your labor, and your profit, but overhead changes would require you to restructure everything from assets to liabilities, the mob that sells the idea that there is more then one way to run a business is right, you can run it on sound business practices, or you can follow the guys that failed basic accounting.
 
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