Overhead Rate Calculator
Calculate business overhead rate from monthly indirect and direct costs.
Returns overhead as a percentage of direct cost, for accurate job pricing.
The overhead rate tells you how much indirect cost is attached to every unit of direct activity — usually per labor hour, per machine hour, or per dollar of direct labor. It is one of the most important numbers in cost accounting because it lets you price jobs, products, and services accurately instead of guessing.
Formula: Overhead Rate (%) = Total Indirect Costs ÷ Total Direct Costs × 100
What each variable means:
- Total Indirect Costs: all costs that cannot be traced to a single job: rent, utilities, insurance, depreciation, supervisor salaries, office supplies.
- Total Direct Costs: the materials and production labor the overhead is spread across. This calculator uses total direct cost in dollars as the base.
Worked example: A small shop has $25,000 in monthly indirect costs (rent, utilities, insurance, admin) and $75,000 in monthly direct costs (materials and production labor).
Overhead Rate = $25,000 ÷ $75,000 × 100 = 33.3%
So for every $1 of direct cost on a job, add about 33 cents of overhead when you price it.
Typical ranges:
- Light manufacturing: $15–$40 per labor hour
- Heavy manufacturing: $40–$120 per labor hour
- Service businesses: 20–80% of direct labor cost
If your overhead rate is climbing year over year, investigate fixed costs like rent or insurance — those are the most common culprits. A lower overhead rate compared to competitors is a genuine pricing advantage.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
SuperGlobalCalculator is independently built and maintained. See how we build and verify our calculators.