YOUR OVERHEAD RATE
IS WRONG.
Most trade contractors estimate overhead at 10%. The real number for a commercial trade contractor is almost always 25 to 42%. That 15 to 32 point difference is the single largest reason profitable-looking businesses run out of cash. CONTROL Chapter 3 walks through the exact calculation, every cost that keeps your business running when you're not building, so you finally know your real number and can rebuild bids around it.
If you've never formally calculated overhead by listing every cost line item, your number is wrong. This isn't a maybe. This is what every Sulphur Prairie Management client discovers in their first month of CONTROL implementation.
You Are Using an Industry Rule of Thumb
"10% overhead" is what most contractors hear and use. It comes from generic small business templates, not commercial subcontracting. The real overhead for a commercial trade contractor is rarely under 18% and typically 25 to 42%.
Equipment Maintenance Is Hidden in Overhead
Equipment maintenance that should be job costed (assigned to specific projects when used) often sits in overhead instead. This inflates overhead and undervalues equipment cost basis in estimates. Chapter 1 and Chapter 2 of CONTROL address this directly.
Owner Salary Is Underpriced or Missing
Most owners either pay themselves below market or take draws that bypass the P&L. Both deflate apparent overhead. To get the real number, owner compensation must be at market rate inside the calculation.
PM and Admin Time Is Mis-Allocated
If project management and admin time is being charged to jobs instead of overhead, jobs look expensive and overhead looks artificially low. The same problem runs in reverse: if overhead type roles are job costed, every bid underprices overhead. Chapter 1 and Chapter 3 fix both.
If your real overhead is 28% and you bid 10%, every project loses 18 percentage points before the crew arrives. On $4M annual revenue, that's $720,000 leaving the business that you can't see, because the loss is spread across every project invisibly. You think you're making 8% net. You're losing 10% net. The bank account confirms it. The P&L hides it.
- Chapter 1: Clean up job cost structure so overhead type costs aren't buried in jobs and vice versa
- Chapter 3: Calculate real overhead by listing every cost, annualizing it, including owner comp at market rate, and dividing by revenue
- Chapter 3: Update the bid template so the overhead rate in every estimate matches the real number
- Chapter 3: Track overhead quarterly, because as the business grows or contracts, the rate changes
- Chapter 7: Include overhead as a tracked metric in the monthly CEO report so you see the trend over 13 months
CONTROL Chapter 3: Overhead Calculation walks through the exact calculation with templates and real examples. Available October 1, 2026.
WANT IT INSTALLED FOR YOU?
The CONTROL book teaches you how to build the system yourself. The Construction CFO, Sulphur Prairie Management, builds and runs it for you. Same system, same outcomes, a different path to get there. From $1,900/month, with 60-day onboarding and 24 trades served.
Most contractors estimate overhead by intuition or an industry rule of thumb, usually around 10%. The real number includes every cost that keeps your business running when you're not building: office, software, insurance, owner salary, admin, vehicles, training, equipment maintenance not job costed, and dozens of smaller costs. When you list them all, the real number is almost always 25 to 42%.
Healthy overhead is 9 to 13% of revenue. Most commercial trade contractors run 25 to 42%. That difference is what most contractors can't see, and it's the largest single reason profitable-looking businesses end up broke.
Two things: calculate the real number (Chapter 3 of CONTROL), then systematically reduce it. Reducing overhead means consolidating software, eliminating duplicate roles, renegotiating insurance and leases, and pricing bids around the real number while you work the rate down.
Every project loses the difference between bid overhead and real overhead. If you bid 10% and run 28%, you lose 18% of revenue on every job before your crew shows up. On $4M in revenue, that's $720K leaving the business invisibly every year.
Yes. Calculating real overhead and rebuilding bid templates is one of the highest-impact things a construction specific fractional CFO does in the first 60 days. Sulphur Prairie Management installs this as part of the CONTROL system implementation.
KNOW YOUR REAL OVERHEAD.
CONTROL Chapter 3 shows you exactly how to calculate it. Join the waitlist for the book.
JOIN THE WAITLIST →