MarginWorkshopOverhead Allocation & Break-Even Revenue
Spread your annual overhead across billable hours, and see the revenue floor you need just to break even, before any owner profit.
Break-even revenue at other gross margins
| Margin scenario | Break-even revenue |
|---|---|
| Thin (25%) | $240,000 |
| Below average (30%) | $200,000 |
| Typical (35%) | $171,428.57 |
| Above average (40%) | $150,000 |
| Strong (45%) | $133,333.33 |
Shared fields save automatically as you edit them. Review or edit everything in one place in your Business Profile, so every engine starts pre-filled.
Next Decision
Based on your results, these related decisions are available.
- Crew Cost & Required Billable RateUse your real overhead-per-hour instead of leaving it at zero.
- Job Profit CheckUse your real overhead-per-hour instead of leaving it at zero.
- Owner Income to Required RevenueSee what revenue you need beyond break-even to actually pay yourself.
- HVAC Billable Technician Rate & Dispatch RadiusUse your real overhead-per-hour instead of leaving it at zero.
- Price Increase Impact SimulatorUse the same average gross margin assumption you set there.
- Employee vs. Subcontractor Cost ComparisonUse your real overhead-per-hour instead of leaving it at zero.
- Next Crew Break-EvenUse your real overhead-per-hour to inform the new crew's incremental overhead estimate.
- Management Overhead Introduced by GrowthUse your real overhead-per-hour to see what a new management hire adds on top of it.
- Recurring Contract ValueUse your real overhead picture to sanity-check the admin overhead percentage assumption.
- Minimum Job Size ThresholdUse your real overhead-per-hour to find the job size floor below which you shouldn't bid.
- Operating Reserve SizingUse your real overhead figure as the base for your reserve target.
Want to Learn More?
- GuideThe Markup vs. Margin GuideUsing your target margin as a markup is the single most common contractor pricing mistake. This guide shows exactly what it costs on a real job, in dollars.
- GuideThe Overhead and Owner Income GuideCovering overhead is not the same as paying yourself. This guide shows both numbers side by side, and how far apart they usually are.
Methodology
Formula: overhead per hour = annual overhead / billable hours per year. Break-even revenue = annual overhead / average gross margin. This is the revenue level at which gross profit dollars exactly cover overhead, zero net profit.
Assumption: "gross margin" here means your average margin across all jobs before overhead is subtracted, a different number from the per-job target margin used in the pricing engines. Confirm your own average rather than relying on the default.
Limitation: this is zero-profit break-even only. See Owner Income to Required Revenue for the revenue needed to actually pay yourself on top of break-even.
Guide: The Markup vs. Margin Guide, pricing this overhead recovery into a bid correctly once it is covered.
Guide: The Overhead and Owner Income Guide, this break-even floor next to the larger number that actually pays the owner.
Frequently Asked
- What counts as overhead here?
- Fixed costs not tied to any single job, rent, insurance, office staff, and similar, spread across expected billable hours to get a per-hour recovery figure.
- How does billable-hour volume affect this?
- Fewer expected billable hours in a year spread the same overhead total thinner across each hour, raising the per-hour figure; more billable hours lower it.
- What does break-even revenue actually represent?
- The annual revenue needed to cover overhead alone, before any owner profit; revenue below this figure means the business is not yet covering its own fixed costs.
- Should owner salary be included in overhead?
- That depends on whether owner pay is treated as a fixed cost or as profit in your own accounting; be consistent with whichever choice you make, since it changes both this figure and Owner Income to Required Revenue.