Overhead Recovery Rate Calculator

Overhead recovery rate turns the fixed cost of running the business — rent, admin pay, insurance, vehicle and equipment depreciation, dispatch software, fuel, utilities — into a number you can add to every quote, before profit. No single method is "correct"; the right one depends on which figure you already know. The tool ships all three:

Per billable hour:
  totalBillableHours = billableHoursPerTech × techCount
  overheadPerHour    = annualOverhead / totalBillableHours

Markup % on direct cost:
  recoveryPct        = (annualOverhead / annualDirectCosts) × 100

% of revenue (sanity check):
  recoveryPct        = (annualOverhead / annualRevenue) × 100

Sample-job load:
  perHour:           overheadLoaded = sampleJobHours × overheadPerHour
  markup / revenue:  overheadLoaded = sampleJobDirectCost × recoveryPct / 100
  all modes:         priceWithOverhead = sampleJobDirectCost + overheadLoaded   (pre-profit)

Worked example. $120,000 overhead ÷ (1,400 billable hrs × 4 techs = 5,600 hrs) = $21.43 / hr. A 6-hour job then carries 6 × $21.43 = $128.57 of overhead, so a $1,500 direct-cost job becomes $1,628.57 with overhead loaded — before profit.

Why % of revenue is a sanity check, not a markup. Applying a revenue-share percentage as a markup on direct cost over-recovers, because revenue is not the same as direct cost. Use it to target a margin, not to mark up individual jobs.

These figures are estimates for your own forecast — no source publishes a vetted industry range, and your rate is never fixed or constant. This tool informs how you price inside your own quoting workflow; it does not store an overhead ledger, customer or job records, or run dispatch, routing, payments, or invoicing.

Overhead recovery is the short definition of what this page produces. The billable-hours divisor in the per-hour method is the input people guess at, and utilization measured from the schedule you actually run replaces that guess.

Once the rate exists it has two jobs. Added to loaded labor cost it produces a rate to quote, which is what the hourly rate a service business quotes assembles, and dropped into a single estimate it becomes the overhead line in the cost build-up behind a single job. The labor half of the same sum is what an hour of payroll truly costs.

Sources: ServiceTitan (per-hour method, $100,000 ÷ 2,916 = $34.29/hr); Construction Executive ($245,000 ÷ $529,000 = 46.3%); getVergo ($300,000 ÷ $1,000,000 = 30%); WorkWave ($4,000 ÷ $50,000 = 8% of revenue).