Overhead

What is overhead?

Overhead includes all the costs of running your business that aren't directly tied to specific jobs. Your rent doesn't change based on how many projects you complete. Your insurance costs the same whether you're busy or slow. These indirect costs are your overhead—the baseline expense of staying in business.

Understanding overhead is crucial for pricing work profitably.

Common overhead costs

Typical overhead expenses include:

• Rent or mortgage — Your workspace costs
• Utilities — Electric, gas, water, internet
• Insurance — Business liability, vehicle, property
• Equipment — Tools and machinery (not job-specific rentals)
• Vehicle costs — Payments, maintenance, fuel for general use
• Administrative costs — Office supplies, software, bookkeeping
• Marketing — Website, advertising, business cards

Covering overhead in your pricing

Every job needs to contribute to overhead, not just cover direct costs. If your overhead is $4,000/month and you do 10 jobs, each job needs to contribute $400 toward overhead before you make any profit. Factor this into your pricing.