Overhead Costs
Overhead costs are the expenses your business pays regardless of how many customers you serve or products you sell. They include rent, utilities, administrative salaries, insurance, and software subscriptions. Overhead is the gap between your gross profit margin and your net profit margin — the cost of keeping the lights on.
Formula
Overhead Rate = (Total Overhead Costs / Total Revenue) × 100
In plain English
What percentage of every dollar you earn goes to keeping the business running (not counting direct service delivery costs)
Why Overhead Costs Matters
Overhead is the silent margin killer. It grows slowly — one new tool here, an office upgrade there — and by the time you notice, it's eating a significant chunk of your gross profit. Understanding and controlling overhead is the key to converting gross profit into net profit.
Overhead Costs by Industry
Choose your industry to see specific benchmarks, examples, and improvement strategies
Overhead Costs for Cleaning Companies
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for Salons & Spas
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for Restaurants
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for HVAC Contractors
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for Marketing Agencies
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for Consulting Firms
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for Creative Agencies
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
Overhead Costs for IT Services
The ongoing expenses of running your business that aren't tied to delivering a specific product or service
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