Service Business Overhead Calculator
Calculate annual and monthly overhead, overhead per billable hour, overhead per job, and the revenue needed to cover fixed business costs.
Overhead allocation
Revenue requirement
Turn recurring business expenses into overhead per hour and per job
Use this calculator to total your annual service-business overhead and convert it into practical pricing metrics.
Service businesses often know their direct labor and material costs but underestimate the recurring cost of running the company between jobs.
This calculator combines fixed expenses such as insurance, software, admin payroll, vehicles, accounting, and facilities, then allocates them across billable hours or jobs.
Keep direct job costs out of overhead if you already assign them to individual estimates. Mixing direct and overhead costs can cause double-counting.
How service business overhead is calculated
The calculator totals recurring annual business costs and spreads them across the capacity metrics you use for pricing.
Add recurring overhead costs
Facility, insurance, software, admin payroll, fixed vehicles, accounting, marketing, office, licensing, and other annual overhead are combined.
Convert overhead to monthly and weekly amounts
Annual overhead is divided across the year for cash-flow and planning context.
Allocate overhead to billable capacity
Annual overhead is divided by billable hours and optional annual job count.
Calculate overhead break-even revenue
If contribution margin is entered, the calculator estimates how much revenue is needed for contribution dollars to fully cover overhead.
Example overhead allocation
Suppose a service business has the following annual overhead:
Annual overhead is $72,000, or $6,000 per month. Across 1,500 billable hours, overhead is $48 per billable hour. Across 600 jobs, overhead allocation is $120 per job. At a 40% contribution margin, the business needs $180,000 of annual revenue for contribution to cover the $72,000 overhead.
What each result means
Overhead allocation helps connect company-level costs with the pricing decisions made on individual jobs.
Annual overhead
The total recurring business costs entered that are not assigned directly to individual jobs.
Overhead per billable hour
The amount of overhead each sellable hour needs to support if overhead is allocated by billable time.
Overhead per job
The average overhead allocation per job based on annual job volume.
Revenue needed to cover overhead
The revenue level where contribution dollars equal annual overhead under the contribution-margin assumption entered.
Monthly overhead
Annual overhead divided by twelve for budgeting and cash-flow planning.
Service business overhead questions
Common questions about allocating fixed business costs into pricing.
What is the difference between overhead and direct job cost?
Direct job costs can be traced to a specific job, such as job labor, materials, disposal, or rentals. Overhead supports the business as a whole and continues even when a specific job is not being performed.
Should field labor be included in overhead?
Usually not if field labor is already treated as a direct job cost. Non-billable admin or management payroll can be included in overhead.
Should advertising be overhead?
It depends on your costing system. Recurring brand or marketing infrastructure can be treated as overhead, while customer-acquisition spend may be tracked separately as a variable acquisition cost.
Is overhead per job accurate if job sizes vary widely?
It is an average allocation. If job sizes vary significantly, overhead per billable hour or another activity-based method may give a more useful pricing signal.
Why calculate revenue needed to cover overhead?
Because overhead is paid from contribution dollars, not from gross revenue alone. The required revenue depends on how much contribution margin remains after direct and variable costs.