Suggested Ballpark Overhead Percentage



15-25%

This range is commonly used in various industries and is considered a reasonable estimate for overhead costs, which can include: Direct Overhead

Expenses directly related to production, such as materials, labor, and machinery.

Indirect Overhead

Non-production expenses, such as administrative salaries, marketing, rent, and utilities.

Factors to Consider

When determining an appropriate overhead percentage, consider the following factors:

Industry

Different industries have different levels of overhead. For example, construction projects typically have higher overhead than software development projects.

Project Type

Specific project characteristics, such as complexity and duration, can impact overhead costs.

Company Size and Structure

Smaller companies may have lower overhead than larger companies due to fewer layers of management and reduced administrative costs.

Location

Labor costs and other expenses vary depending on the location of the project or business.

Recommendations

Consult with industry professionals or experienced contractors in your field for specific recommendations. Conduct a thorough analysis of your actual expenses to determine a more precise overhead percentage.* Adjust the percentage as needed based on project details and experience.

Example:

Let's say you're bidding on a $100,000 project. Using a 20% overhead rate, the project overhead would be:Overhead = $100,000 x 0.20 = $20,000This means that in addition to the $100,000 direct costs, you would also need to budget for $20,000 in overhead expenses to cover non-production costs. Flag for review