How to calculate overhead per billable hour
It's the number that turns "gross profit" into whether you actually made money. Here's the formula, a worked example, and the utilization trap that catches most small shops.
What counts as overhead
Overhead is everything that isn't tied to one specific job: shop or storage rent, the truck and fuel, insurance, phone, software, licensing, and the hours you spend quoting and doing paperwork. It has to get paid whether you booked two jobs this week or twenty.
The formula
Overhead per hour = total monthly overhead ÷ billable hours per month.
Example: $4,000/month of overhead and 120 truly billable hours → $33.33 per billed hour. Every hour you bill has to recover that before a dollar is real profit.
The utilization trap
Be honest about billable hours, not clocked hours. Drive time, quoting, callbacks, and dead time aren't billable. If you assume 160 hours but really bill 100, your overhead-per-hour is way understated — and good-margin jobs still leave you short at the end of the month.
Bake it into every quote
Once you know your overhead-per-hour, add it to each job's cost before you set the price. BidRite does this automatically and rolls it into EBITDA and billable utilization on your dashboard. Try the calculator or see how BidRite costs a job.