What overhead is, which costs belong in it, what percentage to target, and how to build it into job pricing so every roof you install covers the true cost of running your business.
Overhead is the cost of running the business that isn't directly tied to a specific job. Materials, labor, and subcontractors go away if you have no jobs. Overhead — insurance, vehicles, office, admin, your own salary — continues whether or not you're working. Every job you complete must generate enough gross profit to cover its share of overhead plus leave net profit. Understanding your overhead rate is how you price jobs correctly.
| Overhead Item | QuickBooks Account Type | Typical Annual Cost ($1M Company) |
|---|---|---|
| General liability insurance | Operating Expense | $18,000–$40,000 |
| Commercial auto insurance + vehicles | Operating Expense | $24,000–$48,000 |
| Owner salary | Operating Expense (or COGS if active on jobs) | $60,000–$120,000 |
| Admin / office manager | Operating Expense | $36,000–$55,000 |
| Marketing & advertising | Operating Expense | $15,000–$30,000 |
| Software (QBO, roofing platform, etc.) | Operating Expense | $6,000–$18,000 |
| Professional fees (bookkeeping, CPA) | Operating Expense | $10,000–$25,000 |
| Licenses, dues, training | Operating Expense | $3,000–$8,000 |
Once you know your overhead rate, you can price jobs to cover it. The gross margin on every job must exceed your overhead rate plus your target net profit. If overhead is 17.5% and you target 10% net profit, your minimum gross margin target is 27.5%.
| Target | % of Revenue | On a $50K Job |
|---|---|---|
| Direct costs (materials + labor + subs) | 57.5% | $28,750 |
| Gross profit | 42.5% | $21,250 |
| Overhead allocation (17.5%) | 17.5% | $8,750 |
| Net profit | 25% | $12,500 |
Use the free roofing job cost calculator to check gross margin on any job and see whether it's covering your overhead rate.
JobCostBooks delivers a monthly P&L that separates direct job costs from overhead clearly — so you always know your overhead rate and can price jobs to cover it.
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