Don’t Forget About Covering Overhead When You Prepare a Quote

Overhead is all the costs which do not directly apply to a particular job. Examples include loan payments, insurance and rent. Overhead needs to be paid just like job costs but it may not be as visible when you are doing quotes.

Story

Owen quotes his jobs by figuring out how long the job should take, then he adds in the material costs with a small markup and presto he has the quote he will be giving to the client. Owen has been working steadily. When his accountant shows him his income statement and he sees that he has a loss for this year, he is surprised.

Turns out that he had expenses for insurance, advertising, depreciation and interest and he did not make enough money on all of the jobs he did for him to cover those costs. His accountant wants to talk about overhead and Owen is going to listen.

Divide the Overhead into Weeks

One strategy used by business owners who quote by the job is to figure out the annual overhead, add it all up and divide it by 52 to get the amount which has to be made each week. It is also possible to calculate this by working day or obsessive people could figure it out by hour. This is not the only way to cover overhead, but it is simple. You do have to adjust the calculation if you take on more overhead, such…