Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Bid price with O&P applied
$985,791
Calculated overhead recovery rate
7.38%
Total O&P dollars added
$135,791
Cost with overhead only (pre-profit)
$912,769
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How to use this
- 1Enter annual fixed overhead ($).
- 2Enter projected annual revenue ($).
- 3Enter target profit margin (%).
- 4Enter this job's direct cost ($).
- 5Read your bid price with o&p applied on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
Overhead and profit (O&P) are distinct concepts that estimators often blur together: overhead recovery is what you need to add to every job just to cover fixed company costs (office rent, admin salaries, insurance, vehicles) that exist whether or not this particular job runs, while profit is the actual return owners expect for taking on the risk of the work. This calculator starts from your annual fixed overhead budget and projected annual revenue to derive an overhead recovery percentage, then adds your target profit margin on top, and shows how that combined O&P rate applies to a specific job's direct cost — critical because using an O&P rate calibrated for a different revenue year (say, a slow year with less revenue to spread overhead across) on a bid for a busy year will overprice you out of competitive work, and vice versa.
Worked example
Using the values the calculator loads with:
Inputs
- Annual fixed overhead: 480000 $
- Projected annual revenue: 6500000 $
- Target profit margin: 8 %
- This job's direct cost: 850000 $
Results
- Bid price with O&P applied: $985,790.77
- Calculated overhead recovery rate: 7.38%
- Total O&P dollars added: $135,790.77
- Cost with overhead only (pre-profit): $912,769.23
What each field means
Inputs
- Annual fixed overhead ($)
- The annual fixed overhead used in the calculation, measured in $. Starts at 480000 $ so you have a working example on load.
- Projected annual revenue ($)
- The projected annual revenue used in the calculation, measured in $. Starts at 6500000 $ so you have a working example on load.
- Target profit margin (%)
- The target profit margin used in the calculation, measured in %. Starts at 8 % so you have a working example on load. Accepted range: 0–30 %.
- This job's direct cost ($)
- The this job's direct cost used in the calculation, measured in $. Starts at 850000 $ so you have a working example on load.
Results
- Bid price with O&P applied
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Calculated overhead recovery rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total O&P dollars added
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Cost with overhead only (pre-profit)
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
What's a typical overhead recovery percentage for a mid-size contractor?
Most commercial contractors run 8-15% overhead recovery depending on company size and revenue volume — larger contractors with more revenue to spread fixed cost across often land at the lower end, while smaller companies with proportionally higher fixed admin cost relative to revenue run higher. Recalculate this annually against your actual revenue projection, not a static historical number.
Why should overhead recovery rate change year to year?
It's a ratio of fixed cost to projected revenue, so if you're projecting a slower year (less revenue to absorb the same fixed overhead), the percentage needs to rise on each job to still cover total overhead. Using last year's overhead percentage on this year's bids during a revenue downturn will leave real overhead dollars uncovered by year end even if every individual job looked profitable on paper.
Is profit margin applied before or after overhead in the calculation?
This calculator applies profit as a percentage on top of cost-plus-overhead, which is standard practice, but some contractors instead target a specific profit percentage of the final bid price (gross margin) rather than a markup on cost — these produce different dollar results at the same stated percentage, so confirm which convention your estimating team and job costing system actually use.
What happens if actual overhead comes in higher than budgeted mid-year?
If overhead runs over budget partway through the year, either revenue needs to grow to keep the recovery percentage on track, or the overhead percentage needs to be revised upward on remaining bids for the rest of the year. Companies that don't revisit this mid-year often discover at year-end reconciliation that overhead wasn't fully recovered across the book of work, quietly eating into actual profit.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Overhead & Profit Allocation Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/overhead-and-profit-allocation
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/overhead-and-profit-allocation" target="_blank" rel="noopener">Overhead & Profit Allocation Calculator — RevenueLab</a> (2026).</p>
Source: [Overhead & Profit Allocation Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/overhead-and-profit-allocation) (2026).