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What every productive hour has to carry

Bakkie finance, insurance, admin, phones. Add up a normal month, divide by the hours that actually reach a job, and you have the number most price lists leave out.

Overhead recovery rate calculator

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Monthly fixed costs

R
R
R
R
R
R
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R

Productive time

hrs/m

40 hrs × 52 ÷ 12 ≈ 173.

%

Hours that end up on a job.

Overhead recovery rate

R129

Per productive hour, on top of what the labour itself costs

Where the month's fixed costs go

  • Rent19%, R9,000
  • Vehicle finance and insurance31%, R14,500
  • Admin and office wages26%, R12,000
  • Business insurance5%, R2,200
  • Phones4%, R1,800
  • Bookkeeping and accounting5%, R2,500
  • Tool replacement and repairs6%, R3,000
  • Everything else4%, R2,000

The hours that carry them

Reach a job 363 hrsPaid, not billed 156 hrs
Monthly overheadsR47,000
Paid hours available519 hrs
Hours that reach a job363 hrs

Every productive hour you sell carries this before it makes any profit.

How it works

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  1. 01Add up a normal month of fixed costs. Spread annual items such as insurance over twelve months.
  2. 02Work out paid hours for the people on the tools.
  3. 03Multiply by the share of those hours that end up on a job.
  4. 04Divide overheads by those productive hours.

The calculation

Productive hours= people × paid hours × billable share

Overhead rate= monthly overheads ÷ productive hours

Recalculate at least every six months, and whenever a fixed cost changes.
Read the guideHow to work out your overhead recovery rate