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Electrical Contractor Overhead Calculator

Total your annual company costs and convert them into the overhead recovery every billable hour has to carry.

Your electrical business has costs that exist whether or not a specific job is being completed. Trucks, insurance, office and admin, software, marketing, licensing, shop expenses and professional services keep running between service calls.

This calculator helps estimate the annual overhead your company needs to recover through its work. There are no hidden industry averages and no assumptions about what your overhead should be — only the figures you enter. Learn how electrical business overhead works.

Overhead inputs

Avoid Double Counting

This calculator should generally exclude costs you already model separately as direct job or labor costs — direct field wages, payroll burden, job-specific materials and subcontractor costs assigned to a specific job. Entering them here as well counts them twice and overstates the overhead your pricing has to recover.

Owner draws or distributions should not automatically be treated as overhead. If the owner performs administrative work, a reasonable wage for that role is commonly included in administrative payroll; profit distributions are a different item. This is educational guidance, not tax or accounting advice.

Fleet & Vehicles
Insurance & Risk

Do not include workers compensation here if you already treat it as payroll burden in your labor-rate calculation.

Office & Administration
Software & Communications
Marketing & Sales
Licensing, Training & Compliance
Tools & General Company Costs
Overhead Recovery

Overhead is recovered through the hours you can actually bill, so capacity changes the per-hour result.

Include field employees whose labor contributes to billable customer work.

Use the realistic number of hours per field employee that the business expects to recover through customer work. Do not automatically assume 2,080 billable hours.

What Counts as Electrical Business Overhead?

Overhead is the cost of keeping the company open. For most electrical contractors it falls into a handful of recurring categories: fleet and vehicles, business insurance and bonding, office and administrative expense, software and communications, marketing and sales, licensing and training, and general tools and company costs.

Electrical companies typically carry a heavier overhead load than trades without a rolling fleet and a test-equipment inventory. For a deeper walkthrough of what belongs in each category and what to leave out, read how to calculate electrical business overhead.

Overhead vs Direct Job Costs

A direct job cost can be traced to one customer's work: the field labor hours on that job, the payroll burden attached to those hours, the material pulled for it, permits for that address and any subcontractor assigned to it. Those costs disappear if the job never happens.

Overhead does not. The van payment, the general liability premium and the dispatch software renew whether the schedule is full or empty. That distinction matters because direct costs are priced into the job while overhead has to be recovered across all the work you do.

Why Billable Hours Change Your Overhead Recovery

The same annual company costs spread across fewer billable hours require greater recovery per hour. A company with $200,000 of overhead and 6,000 billable hours needs $33.33 per hour. Drop utilization to 4,500 hours without cutting a single expense and the same overhead now needs $44.44 per hour.

This is why optimistic billable-hour assumptions quietly underprice work. Drive time, shop time, training, meetings and warranty calls all consume paid hours that never reach an invoice. Use the hours your company actually recovers, not the hours it is scheduled.

How Overhead Fits Into Your Labor Rate

Overhead recovery per hour is one of two components in a break-even labor rate. The other is loaded labor cost — the field wage plus payroll burden, divided across billable hours. Added together, they represent the point at which an hour of field time covers its costs and nothing more.

Profit margin is applied after break-even in the labor-rate model, as a percentage of the final rate rather than a markup on cost. Walk through the full build-up in how to calculate an electrical labor rate, see how required rates differ between companies in what an electrical contractor should charge per hour, then carry this overhead number straight into your billable rate.

Use This Overhead in Your Labor Rate

Product

Overhead Is One Part of Business Health

Company overhead does not sit on its own. It interacts with pricing, labor utilization, sales, staffing and profitability — change one and the others move with it. Contractor Core is the guided way to work through those areas together.

Explore Contractor Core

Overhead questions

Overhead is what your company spends to stay open regardless of whether a specific job is running: service vehicles, business insurance, office or shop space, administrative payroll, software, phones, marketing, licensing, training, general tools and professional services. If a cost cannot be traced to one customer's job, it usually belongs in overhead.

Pull twelve months of operating expenses from your accounting records, remove anything already treated as a direct job cost, group the remainder into categories, and total them. That annual figure is your overhead. Dividing it by the hours you can actually bill converts it into the per-hour number your pricing has to recover.

Field electrician wages for billable work are a direct labor cost, not overhead, and are usually modeled inside the labor rate. Administrative or office payroll is overhead. If a field employee spends part of the year on non-billable company work, that portion is often handled through your billable-hours assumption rather than by moving wages into overhead.

Only if you are not already treating it as payroll burden. Most contractors include workers compensation in the burden percentage applied to field wages. Putting it in both places counts it twice and inflates your rate.

Divide total annual overhead by total annual billable hours. Total billable hours is the number of billable field employees multiplied by the annual billable hours you realistically expect from each of them.

Because the annual cost of running the company does not shrink when utilization drops. The same dollars are spread across fewer invoiced hours, so each remaining hour has to carry more of the load.

Job-specific materials are a direct cost and are priced on the job, not in overhead. Consumables and non-job-specific supplies that cannot be traced to a customer — shop stock, small hardware, tape and marking supplies — are commonly treated as overhead.

At least annually, and again after any material change: adding a truck or an employee, moving into a shop, changing insurance carriers or taking on a new software platform. Overhead assumptions age quietly, and stale numbers understate your required rate.

Continue with the Pricing & Profitability hub or browse every contractor calculator.