Understanding typical overhead percentages by trade helps you benchmark your business against the industry and identify whether your costs are reasonable or inflated. Overhead as a percentage of revenue tells you how much of every dollar goes to keeping the lights on versus paying for jobs and generating profit. A contractor with 45% overhead keeps only 55 cents of every dollar for direct costs and profit combined. One with 25% overhead has 75 cents to work with. This difference directly affects how competitive your pricing can be and how much profit you retain. The ranges below are commonly used rules of thumb for six trades, not the result of a single survey, so treat them as a starting point rather than a verdict. Enter your own overhead and revenue to see where you fall, and whether reducing overhead could meaningfully improve your margins.
Overhead is every cost you pay whether or not a job is on the schedule: insurance, vehicle payments and fuel for non-job driving, phones and software, shop or office rent, accounting, licensing and marketing. It excludes job materials and the labor you bill directly. Revenue is total sales for the same twelve months.
A contractor with $48,000 of overhead on $160,000 of revenue runs at 30%. Keep the same overhead and grow revenue to $200,000, and overhead drops to 24% without cutting a single cost. That is why the percentage improves as a business grows, up to the point where you add office staff and a bigger shop.
✓ Typical overhead ranges by trade
Trade
Typical range
Why
Painting
18% to 30%
Low equipment cost, short job setup
Electrical
22% to 35%
Licensing and tools, moderate vehicle cost
Plumbing
25% to 40%
Stocked vans, after-hours availability
Landscaping
25% to 35%
Trailers, mowers and seasonal equipment
Roofing
28% to 40%
High insurance and workers' comp rates
HVAC
30% to 45%
Diagnostic tools, inventory, service agreements
Solo operators working from home usually sit at the bottom of the range. Companies with a shop, office staff and several trucks sit near the top. If you are more than five points above your range, look first at vehicles, insurance renewals that have not been shopped around, and software subscriptions nobody uses.
✓ Frequently Asked Questions
What overhead percentage is normal for contractors?
Normal ranges by trade: plumbing 25-40%, electrical 22-35%, HVAC 30-45%, painting 18-30%, landscaping 25-35%, roofing 28-40%. Solo operators typically run at the low end. Companies with employees, vehicles, and office space run higher. The percentage is calculated as total overhead divided by total revenue. A solo plumber with $40,000 overhead on $160,000 revenue runs 25%. The same plumber with $60,000 overhead on the same revenue runs 37.5%. Revenue growth without proportional overhead growth is the path to efficiency.
How can I reduce my overhead percentage?
Two approaches: reduce absolute overhead costs, or increase revenue without adding overhead. On the cost side: shop insurance annually (savings of 10-20% are common), eliminate unused software subscriptions, negotiate vehicle maintenance contracts, reduce marketing spend on channels with low ROI, and consider whether office/shop space is fully utilized. On the revenue side: raise rates, add high-margin services, improve scheduling efficiency to fit more jobs per week, and reduce unbillable time. A 5% reduction in overhead percentage translates directly to 5% more net margin.
Is my overhead percentage too high?
Compare your percentage to the ranges for your trade listed above. If you are 5+ points above the top of the range, investigate where the excess is coming from. Common culprits: an oversized vehicle fleet, premium office space that does not generate revenue, excessive marketing spend, or insurance policies that have not been shopped in years. Sometimes high overhead is justified by the revenue it enables (a good shop attracts better employees), but it should be a conscious choice, not an unexamined default.
How does overhead percentage change as a business grows?
Overhead percentage typically decreases as revenue grows, up to a point. A solo contractor adding a second crew can nearly double revenue while adding only modest overhead (one more vehicle, incremental insurance). From two crews to four, overhead might hold steady as a percentage. Beyond that, you start needing office staff, a larger shop, fleet management, and the overhead percentage can climb back up. The sweet spot for many contractors is 2-3 crews with lean operations, where economies of scale work without bureaucratic overhead.
Should I include my own salary in overhead calculations?
It depends on the purpose of the calculation. For pricing and rate-setting: your salary is a separate line item in the hourly rate formula, not overhead. For financial reporting: if you pay yourself a salary through payroll, it appears in labor costs. If you take owner draws, it comes from profit. For overhead percentage benchmarking: exclude your salary to compare apples-to-apples with industry data, which typically separates owner compensation from overhead. The Overhead Calculator treats overhead separately from salary for this reason.