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A resource from RocketLevel for restoration company owners and finance leads, backed by decades of experience in the trade. About a 5 minute read.
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Make your own copy. Open the Overhead and Break-Even Calculator; Google will prompt you to save your own copy. Fill in the green cells and everything else calculates. It is yours to keep and edit. Its results are estimates built only from what you enter, so check them with your own accountant.
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In our experience many owners have never calculated their overhead precisely, and it decides whether every job you take makes money or loses it. Overhead is everything it costs to keep the doors open before you do a single job: rent, office staff, insurance, vehicles, software, the owner's salary, marketing. If your pricing doesn't cover overhead before profit, you're losing money on every job, just slowly enough that it's hard to notice. Work out your real overhead, and the break-even it creates, before you set another price.
The Restoration Industry Association (RIA) 2025 Cost of Doing Business Report puts average total overhead at 38.53 percent of revenue for FY2024, up from roughly 36 percent the year before. The figure is on page 37. Pages 38 and 39 give the spread by revenue band, which runs from 26.55 percent at $30M to $49.9M (page 39) up to 45.97 percent at $1M to $2.99M (page 38), so the average is a poor target and your own band is the better comparison. The 2025 report is a free download from the Cost of Doing Business download page (checked September 25, 2026). Get the report and check the figure against your own books. Overhead also varies enormously with how much work you self-perform, whether you own or rent equipment, and what you pay yourself.
The number surprises owners who think of overhead as just rent and a receptionist. It includes all the indirect costs that do not belong to any one job but have to be paid by all of them: management, administration, insurance, vehicles and equipment not on a job, software, training, and the owner's own time. Underestimate it and every estimate you build is quietly too low. For pricing, use the figure you calculate from your own general ledger, covered in the next section.
Total your indirect costs for the year: everything that is not direct job cost (direct labor, direct materials, direct equipment, subs). Divide that by your revenue. That percentage is your overhead rate, the share of every dollar that is spoken for before profit. Run it honestly, including your own salary and the costs owners tend to forget, and you'll have a number you can actually price against.
Once you know overhead, you know your break-even: the revenue you must do, at your real margin, just to cover your costs and make zero. Below it you lose money; above it you profit. The formula is simple: break-even revenue equals your annual overhead dollars divided by your gross margin percent, written as a decimal. Worked illustration: if your overhead is $600,000 a year and your gross margin is 40 percent, your break-even is $600,000 divided by 0.40, or $1.5M in revenue just to reach zero.
Run that example one step further and you can see how thin the trade is. At $1.5M of revenue, a 40 percent gross margin produces $600,000 of gross profit, and $600,000 of overhead consumes all of it. Do $1.6M instead and the extra $100,000 of revenue throws off $40,000 of gross profit against overhead that barely moves, so nearly all of it drops to the bottom line. It also shows why an overhead rate near 38.5 percent against a 40 percent gross margin leaves barely a point and a half of net, and why a single mispriced job can erase a quarter.
Knowing this number changes how you think about a slow month, a discount, or taking a marginal job. Build every price from your break-even rather than from habit.
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Do this: Calculate your overhead rate this week: total indirect costs (including your salary) divided by revenue. Then write your break-even revenue next to it. Owners who do this for the first time often find they have been pricing below their real cost on at least some of their work.
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Overhead runs whether or not your crews are working. That is why utilization matters: an idle crew or an idle piece of equipment is still costing you overhead with no revenue to cover it. A slow week costs you real money, and growth works the other way: more revenue over the same overhead is how margin expands. Owners who know their overhead price more accurately, push utilization, and walk away from work that quietly loses money.