Make every sellable hour carry its share

Contractor Overhead Recovery & Break-even Calculator

Normalize monthly, quarterly, and annual overhead, then recover it per billable hour, per job, or through a revenue target.

Planning estimateFormula v1.0.0Reviewed July 31, 2026

What it answers

Turn the annual cost of running the business into a break-even and target operating rate.

Runs locally

Local workspaceInputs are not sent anywhere

Overhead recovery

Build the annual cost of staying open

Keep indirect overhead separate from direct job costs. Enter every rate yourself; no regional or legal defaults are supplied.

Recovery model

Per billable hourSpread overhead over annual billable capacityPer jobSpread overhead across annual job countRevenue targetRecover direct cost, overhead, and operating margin

Overhead line items

Amounts are normalized to one annual total using their cadence.

Overhead item 1

CategoryDescriptionAmount$Cadence

Recovery, capacity, and margin

Required fields change with the selected model. Optional fields unlock additional comparisons.

Annual billable hoursRequiredThe realistic annual hours available to bill across included roles.Annual jobs completedOptionalBlended direct-labor cost per billable hourRequired$Current average billable rateOptional$Target operating marginRequired%Operating margin includes the entered direct-cost and overhead basis.Annual direct job costsOptional$Include materials and subcontractors here only for revenue-target mode.Productive available hoursOptionalUsed to estimate the utilization required to cover annual overhead.

Your result

See what every billable hour or job must recover

Add overhead, select a recovery model, and enter its required capacity inputs. Valid edits recalculate automatically.

Formula methodology

Input contract

What goes into the result

Overhead line items and cadence
Annual billable hours or jobs
Direct labor cost per billable hour
Current rate
Target operating margin

Output contract

What comes back

Annual and monthly overhead
Overhead per hour and job
Break-even rate
Target rate
Hours required to cover overhead
Revenue target

Worked examples

Follow the denominator.

These are hypothetical teaching examples, not market-rate recommendations. Your result uses only the values you enter.

Example 1

$120,000 overhead ÷ 3,000 billable hours

$40 overhead per billable hour + $50 direct labor

$90 break-even · $112.50 at 20% operating margin

Example 2

Billable hours fall 10%

The same annual overhead is divided by less capacity

Required recovery per hour rises

Included in the math

Monthly, quarterly, and annual normalization
Per-hour and per-job recovery
Revenue-target mode
Hours, overhead, and margin sensitivity

Not modeled unless entered

Materials and subcontractors unless entered in revenue mode
Direct costs already carried by a job
Any assumed market rate
Tax

Edge cases & common mistakes

The formula can be right while the cost basis is wrong.

Mixing direct cost into overhead

A technician’s productive labor belongs in direct job cost; office payroll normally belongs in overhead.

Double-counting vehicles or insurance

Check whether a cost already appears in labor burden, a job line item, or another overhead category.

Using an impossible contribution

If the current rate does not exceed direct cost, no volume of hours can cover overhead.

Plain-language answers

Frequently asked

What is a break-even hourly rate?

It is the rate that recovers the selected direct labor cost plus allocated overhead with zero operating profit.

Is operating margin the same as gross margin?

No. Operating margin is measured after allocated overhead. Gross margin is measured after direct job cost but before overhead.

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