Business overhead cost calculator

Add up what it costs to keep the business open each month, before you sell anything. This free overhead cost calculator totals rent, utilities, insurance, software, admin salaries, marketing and other fixed costs, then shows your monthly and annual overhead, overhead as a percentage of revenue, and an overhead rate per labor hour or per unit when you enter those figures.

The calculation uses only the numbers you type. Nothing is saved or sent.

How to use the overhead cost calculator

1. Enter each category as a monthly amount: rent or lease, utilities, insurance, software and subscriptions, admin and management salaries, marketing, and other fixed overhead. Enter 0 for any category you do not have. At least one must be above zero.
2. Turn bills you pay less often into a monthly figure. Divide a yearly insurance premium by 12 and a quarterly bill by 3.
3. Enter monthly revenue, the direct labor hours worked in the month and the units made or sold, if you want those rates. Enter 0 to skip any of them, and the calculator shows only the rates it has figures for.
4. Select Calculate to see the totals, a bar chart of the categories and every step of the working. Use example loads the worked example below.

How to calculate overhead

Monthly overhead = rent + utilities + insurance + software + admin salaries + marketing + other overhead

Annual overhead = monthly overhead × 12

Overhead percentage = monthly overhead ÷ monthly revenue × 100

Overhead rate per labor hour = monthly overhead ÷ direct labor hours

Overhead per unit = monthly overhead ÷ units made or sold

An overhead rate spreads the costs that belong to no single sale across a measure of the work, such as labor hours or units. Use the base that drives your prices. A shop selling goods usually thinks per unit or as a share of sales, and a service business that quotes by the hour thinks per labor hour. Use figures for the same month in every field, so each rate describes one period.

Amounts are rounded to the cent and percentages to two decimal places, each from the unrounded total.

Worked example: a month at a small gift shop

Meadow Corner, a fictional gift shop, lists its costs and activity for one month:

The seven categories add up to monthly overhead of $9,200, or $110,400 over 12 months.

Admin and management salaries are the largest category at $4,200, or 45.65% of overhead. Each of the 2,300 items sold has to carry $4 of overhead before it earns a profit, and every staffed hour on the shop floor carries $11.50 on top of that person's pay.

What counts as business overhead costs

Overhead is the cost of running the business that does not rise or fall with each sale. Common examples:

• rent or lease payments and service charges for the premises
• electricity, gas, water, internet and phone
• business insurance, such as property and liability cover
• point-of-sale, accounting, scheduling and other software subscriptions
• pay for people who run the business rather than make or sell the product, such as a manager, bookkeeper or office assistant, with the employer taxes and benefits on that pay
• advertising, a website and other marketing paid for each month
• other fixed costs, such as bank fees, cleaning, security, routine repairs, professional fees and loan interest

Leave out direct costs: stock you buy to sell, materials, packaging, card fees charged on each sale, delivery for orders, and the wages of the staff whose hours you enter as direct labor. Those belong in your product cost, or in the variable cost field of the break-even calculator. A cost counted twice, once as overhead and once in the product cost, makes prices look less profitable than they are.

Use the overhead rate in your prices

Add the overhead per unit or per labor hour to direct costs when you set a price or quote a job. A 6-hour job at the example shop carries 6 × $11.50 = $69 of overhead, on top of materials and the pay for those hours. Check the selling price and margin with the margin and markup calculator, and see how many sales cover the month's overhead by entering it as fixed costs in the break-even calculator.

Salaries are often the largest line. Before you hire for an office or management role, the staff cost calculator shows the weekly cost with employer costs and the extra sales needed to cover it. Record actual costs in the income and expense tracker and rerun this calculator each quarter, because rent reviews, insurance renewals and new subscriptions raise overhead without anyone deciding to spend more.

For wider context, the U.S. Census Bureau's Annual Retail Trade Survey publishes detailed operating expenses for U.S. retailers by kind of business. Whether a cost is tax-deductible is a separate question, with its own rules in each country: see the IRS guide to business expense resources in the United States, or GOV.UK's expenses if you're self-employed in the UK. This calculator is not tax or accounting advice.

Frequently asked questions

Can I use the overhead cost calculator without an account?

Yes. Enter the figures and calculate. Nothing is saved or sent, so use Copy result if you want to keep the figures.

What is a good overhead percentage?

There is no single right figure. It depends on the kind of business, its rent and how much it sells. The most useful comparison is with your own earlier months: a percentage that climbs while sales stay flat means overhead is growing faster than the business.

Is overhead the same as fixed costs?

Mostly. Overhead is usually fixed or close to it, such as rent and insurance. Some of it moves a little with activity, such as utilities in a busy month, so enter a typical monthly amount. The monthly overhead from this calculator can be the fixed costs figure in a break-even calculation for the same month.

Should the owner's pay be included in overhead?

Decide once and keep to it. If the owner draws a regular salary for running the business, include it in admin and management salaries so the overhead rate covers it. If the owner takes only what is left over, leave it out, and remember that the profit has to pay the owner.

What if I pay some bills yearly or quarterly?

Convert them to a monthly amount before you enter them. A $2,160 yearly insurance premium is $180 a month, and a $660 quarterly software bill is $220 a month.

Which labor hours should I enter?

Enter the hours of the people who do the work you sell, such as staff serving customers or a technician on a job, for the same month. Leave out the hours of admin staff whose pay is already in overhead, or the rate counts them twice.

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