Overhead is what it costs to keep your trades or home-services business open before the first job starts. Office wages, insurance, vehicle payments, software seats, storage, shop rent. These bills arrive in a slow week and a busy one. Knowing the monthly number lets you price work properly and spot spending that stopped earning its keep.
What counts as business overhead?
Overhead is every cost that keeps the company running and is not tied to one specific job. Rent, insurance, office wages, software seats, storage and shared vehicle costs count; paint for the Elm Street repaint does not. The test: if you canceled tomorrow's whole schedule, would the bill still show up?
| Overhead line | What it covers | Example monthly cost |
|---|---|---|
| Shop and yard rent | 1,800 square feet, fenced yard for staging | $2,200 |
| Vehicles | Payments, plates, and servicing on three trucks | $2,650 |
| Insurance | General liability and commercial auto | $1,150 |
| Admin hours | The coordinator's 30 hours a week plus the owner's office time | $4,400 |
| Software seats | Field service app, accounting, payroll, estimating, phones | $610 |
| Storage | A rented 10x10 unit plus the company cloud plan | $260 |
| Recurring rentals and services | Standing scaffold rental, uniform laundry, water cooler | $390 |
| Total | The cost of being open | $11,660 |
Overhead is one reason your sales number and your profit never match, the gap covered in revenue versus profit. Most of these lines are fixed, so they arrive in a slow month too — see fixed and variable costs.
How do you calculate an overhead rate?
Track overhead monthly in your books, then convert it to a per-hour rate for pricing. The monthly total is what you must cover to break even. The per-hour rate is how much of that total each job has to carry.
The conversion is one division: monthly overhead ÷ the billable field hours you actually sell. The shop's seven field staff bill about 910 hours a month once travel, shop time, and rain days come out. That is $11,660 ÷ 910 = $12.81 of overhead per field hour.
A two-painter job running five days is 80 field hours, so it carries about $1,025 of overhead before labor and materials. Divide by payroll hours instead and the rate drops to $9.72, so every quote you write comes out short. Redo the division when you add a truck or lose a crew.
How do you cut overhead costs?
Block 30 minutes on the same day each month, open last month's bank and card statements, and sort every recurring charge largest to smallest. Work down the list and answer four questions on each line. Stop at 30 minutes; next month you start where you stopped.
- What is this paying for?
Write it in plain words, not the vendor name on the statement.
- Who uses it?
Name a person. Twelve seats billed when eight people work here is $156 a month.
- Do we still need it?
Judge the last 90 days, not why you bought it. The unit emptied in April still bills $185.
- When can we change or cancel it?
Record the renewal date and notice window. A 1 March renewal needs a January decision.
Cutting seats nobody opens and a storage unit nobody has entered since April is free money. Cutting the second truck, the insurance limits, or the coordinator's admin hours is not — those hold the schedule together, and the cost comes back as callbacks and overtime.
Connect your job software and accounting, then ask Barry for a monthly rental check: it flags a rental still billing weeks after closeout, and it cancels nothing. Costs that drift while a job is still live need a weekly routine, which is in cost control.
There are three practical ways to do this: use a spreadsheet, ask your accountant or bookkeeper, or connect your accounting and job tools so Barry AI can total overhead and flag duplicate, unusual, or no-longer-needed spending.
Barry, review last month's connected expenses and job records. Total my recorded overhead and flag duplicate charges, unusual increases, and rentals that may have continued after jobs finished.
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