Contractor Overhead Percentage for Small Jobs

The smaller the job, the higher your overhead percentage needs to be. Most contractors get this backwards, and it costs them money every single week.

Here is the reality: your fixed costs to show up on any job don’t shrink just because the job is small. The gas to drive there. The hour of setup and cleanup. The invoice you have to write. The insurance that covers you from the moment you pull out of your driveway. None of that scales down. So if you’re applying the same overhead percentage to a $300 repair as you are to a $15,000 bathroom remodel, you are losing money on the small one.

This post breaks down what contractor overhead percentage actually means for small jobs, how to calculate it right, and how to use a minimum charge strategy so you stop leaving money on the table, or worse, taking jobs that cost you to show up.

Quick Answer

What overhead percentage should contractors use for small jobs?

For large projects ($10,000+), most contractors work with an overhead and profit markup of 20-35%. For small jobs under $2,000, you should target 40-60% or higher, depending on your fixed costs and minimum charge. A $300 repair job with a 20% markup leaves you with $60 to cover drive time, setup, cleanup, invoicing, and actual overhead. That’s not enough. You need either a higher percentage or a minimum charge floor, ideally both.

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Why Small Jobs Eat Your Overhead Alive

Think about what it costs you just to show up on any job, regardless of size.

You’ve got drive time, which is typically not billable. Let’s say 30 minutes each way, that’s an hour of your time gone before you swing a hammer. At $45/hour for a carpenter, that’s $45 in labor you can’t charge for. Then there’s loading the truck, unloading, setup, and cleanup. Call it another 30-45 minutes. Now you’re at almost two hours of time that doesn’t show up on the invoice.

Then there’s the back-office work: writing the estimate, following up, writing the invoice, collecting payment. Another 30-60 minutes, minimum.

You’re at 2.5 to 3 hours of time wrapped around every job before the actual work even starts. On a 10-hour job, that’s 25-30% overhead on time alone. On a 2-hour job, that’s 125-150% overhead. The math just doesn’t work the same way.

Here’s how it looks in a table:

Job Size	Billable Hours	Fixed Time Overhead	Overhead as % of Total Time
$200 repair (2 hrs)	2 hours	2.5 hours	56%
$800 half-day job	4 hours	2.5 hours	38%
$3,000 two-day job	16 hours	2.5 hours	14%
$15,000 remodel	80+ hours	2.5 hours	3%

The job didn’t get cheaper. Your costs just swallowed a bigger percentage of it. That’s why you cannot use the same overhead percentage across every job type.

Try EstimationPro free and see how your real overhead stacks up against what you’re actually charging.

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What Is Contractor Overhead Percentage and How Do You Calculate It?

Overhead is every cost in your business that doesn’t go directly into a specific job. Not materials. Not labor on that job. Everything else: insurance, truck payment, phone, software, advertising, licensing fees, accounting, the time you spend doing estimates that you don’t win.

The standard formula:

Overhead Percentage = Total Monthly Overhead / Total Monthly Revenue x 100

So if your monthly overhead is $4,000 and you’re bringing in $20,000 in revenue, your overhead percentage is 20%. You need to recover that 20% across every job you do.

Where it breaks down on small jobs is that overhead isn’t perfectly distributed. A $300 job doesn’t use 20% of your overhead for the month. It probably uses 40-50% of its own value in overhead because of all the fixed-cost time mentioned above.

This is why the industry standard markup of 15-35%, typical around 25% for contractors, works fine on medium to large jobs but fails on small ones. For general contractors, typical markups range from 10-50%, with 20% being common. But those averages are built on projects where the fixed costs are a small fraction of the total.

When you’re doing repair work, honey-do lists, or small maintenance jobs, you need to think differently.

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How to Set Your Overhead Percentage for Small Jobs

The right way to think about this is to calculate your true cost to show up before any work begins.

Step 1: Calculate your loaded hourly rate

This includes your labor cost, your overhead allocated per hour, and your profit margin. If you’re paying a carpenter $25/hour and your overhead adds another $15/hour, your loaded rate is $40/hour before any profit.

Step 2: Calculate your fixed job startup cost

Add up the time and cost of everything that happens regardless of job size:

• Drive time (both ways at your loaded rate)
• Load/unload and setup time
• Estimate and invoice time
• Any material pickup runs

Let’s say this comes to 2.5 hours at $40/hour loaded = $100 in fixed startup cost per job.

Step 3: Apply that to different job sizes

Job Revenue	Fixed Startup Cost	Startup as % of Revenue
$150	$100	67%
$300	$100	33%
$600	$100	17%
$1,200	$100	8%

You can see why $150 jobs are almost always money-losers. That’s before you touch the actual work.

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The Minimum Charge Strategy (and Why You Need One)

A minimum charge is the floor amount you’ll accept for any job. It isn’t about being greedy. It’s about covering your real cost to show up.

Here’s how I think about it: if my cost to mobilize for any job is $100 before a single nail goes in, then I need a minimum charge that covers at least that, plus the first hour of actual work, plus a reasonable profit margin. That puts a realistic minimum somewhere between $175 and $350 for most one-person or small crew operations.

What to include in your minimum charge calculation:

1. Drive time (round trip at your loaded rate)
2. Setup and teardown (half hour minimum)
3. Administrative time (estimate, invoice, communication)
4. Material markup on any supplies you pick up
5. Your minimum profit margin (not optional)

A worked example:

Brad drives 20 minutes each way to a small caulking and touch-up job. He spends 30 minutes loading up and setting up. The actual work takes 1.5 hours. Cleanup is 20 minutes. He’ll spend another 30 minutes invoicing, following up, and doing the admin.

Total time: 4 hours and 10 minutes. Actual billable work: 1.5 hours.

At a $40 loaded hourly rate, this job costs $167 to execute. If he charges $180 for the job (thinking it was “just 1.5 hours of work”), he made about $13 in profit. That’s 7.2% margin. Not sustainable.

With a minimum charge of $325, that same job now returns a reasonable margin and covers his real cost. The customer might balk. But the customer who understands what it costs to run a legitimate licensed, insured operation will get it. And if they don’t, they probably weren’t a great client anyway.

“Good, fast, or cheap. Pick two.” That’s the reality of this business. Someone who wants cheap is probably going to find someone who will show up for $150. That someone might not be licensed. Might not be insured. Might not warranty the work. You get what you pay for. That’s not a cliche in this industry, it’s just true.

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Worked Example: Right Way vs. Wrong Way to Price a Small Job

Scenario: Replace a bathroom faucet, caulk the tub surround, and fix a loose cabinet hinge. Estimated work time: 2 hours.

Wrong way (flat 20% overhead markup):

• Materials: $85
• Labor: 2 hours x $35 = $70
• Total cost: $155
• 20% markup: $31
• Quoted price: $186

At $186, after drive time, setup, cleanup, and admin, this contractor made maybe $20. Not an hourly rate. Total profit on the job. That’s a trip to the hardware store and back plus a quarter tank of gas burned for a $20 day.

Right way (minimum charge + accurate overhead for small jobs):

• Materials: $85 with 25% markup = $106
• Actual billable work: 2 hours x $45 = $90
• Fixed job cost (drive, setup, admin, cleanup): $100
• Overhead percentage on labor (40% for small jobs): $36
• Profit margin (15%): $50
• Quoted price: $382

With a minimum charge floor of $350, you’d quote $382, or simply apply your minimum. The customer gets a professional job with a warranty. You make money on the trip.

If the customer says that’s too much, they can hire someone else. Your business doesn’t run on charity.

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Pro Tips for Pricing Small Jobs Profitably

Set a published minimum charge and stick to it. Put it in your estimate template. “All work subject to a $300 minimum service charge.” This sets expectations before you’re ever on the phone negotiating.

Bundle small jobs when you can. If a customer has three small things to fix, price them together as one visit. The fixed startup cost is spread across more work hours, which improves your margin on all three.

Batch small jobs by geography. If you have two small jobs in the same neighborhood on the same day, your per-job drive time drops significantly. Route your schedule this way whenever possible.

Charge for material runs. If you have to make a hardware store run for a small job, that’s time and cost. Build it in. A flat $35-50 material run charge on jobs that require it is completely reasonable.

Use the Contractor Markup Calculator to verify your numbers before you quote. Small jobs are where most contractors eat losses without realizing it. Run the math every time, not just on big projects.

Know your break-even job size. Calculate the minimum revenue a job needs to generate before it’s worth taking. For most small contractors, that number is somewhere between $200 and $400. Anything below that, and you need to either meet your minimum charge or pass on the job.

Use the Labor Cost Calculator to get your loaded rate right. Knowing your true burdened labor rate is the foundation for every overhead and markup calculation on small jobs.

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Common Mistakes Contractors Make Pricing Small Jobs

Quoting based on work time only. The most common mistake. You price the 90 minutes of actual labor and forget the 2 hours of overhead time surrounding it. Every time.

Using the same markup across all job sizes. A 20% markup works on a kitchen remodel. It doesn’t work on a faucet replacement. The math is different.

Giving in on the minimum charge. The customer says $300 is too much to just fix a leaking faucet. You drop to $175 to keep them happy. Now you’ve lost money to maintain a relationship with someone who doesn’t value your time or expertise. That’s not a good trade.

Not tracking job profitability. Most contractors track revenue. Few track actual profit per job. If you did, you’d see that your small jobs are subsidized by your big ones. At some point you have to fix that or just stop doing small jobs.

Underpricing materials. You grab $40 in parts at the hardware store and charge the customer exactly $40. You spent 20 minutes driving there, loaded it into your truck, and managed the material. Markup those materials. 15-25% is standard and entirely appropriate.

Knowing your numbers is the difference between running a business and running yourself ragged. For more on how to build out your full pricing structure, see How Much to Charge for Labor and Construction Bid Tips. For a deeper look at what overhead and profit actually represent in a bid and what the industry benchmarks are, read Overhead and Profit Explained. And if you want to see how overhead fits into the full estimating process from scope to final number, our cost estimating guide covers the complete framework.

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FAQ: Contractor Overhead Percentage for Small Jobs

What is a typical overhead percentage for a small contractor?

Most small contractors run overhead between 20-35% of revenue. The challenge is that this average includes large jobs that have naturally lower overhead ratios. On individual small jobs (under $1,000), effective overhead as a percentage of the job can run 40-70% or more because fixed startup costs don’t scale down with job size.

Should I charge more per hour for small jobs?

Yes, or use a minimum charge. Either approach gets you to the same place. If your standard labor rate is $40/hour, you might charge $55-60/hour for small repair jobs, or apply a minimum charge that covers your true cost to mobilize. Many contractors do both, higher small-job rate plus a minimum service charge.

How do I explain a minimum charge to a customer?

Be straightforward. “We have a $300 minimum for any service call. That covers our drive time, setup, and the administrative cost of the visit, regardless of how long the actual work takes.” Most reasonable customers understand this when it’s explained plainly. The ones who don’t are often the same ones who will be difficult throughout the job.

What’s a fair minimum charge for a residential contractor?

For a solo contractor or small crew in most US markets, $250-$400 is a reasonable minimum. Higher-cost-of-living areas (Pacific Northwest, California, Northeast) typically run $300-$500. This should cover your full cost to show up plus a modest profit margin, before billing a single billable hour.

Does overhead percentage change for commercial vs. residential small jobs?

Yes. Commercial small jobs often have additional requirements (certified payroll, specific insurance endorsements, union labor in some markets, more documentation) that add overhead. A commercial minimum charge should typically be 25-40% higher than your residential minimum to account for this.

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The Bottom Line on Small Job Overhead

Small jobs are not automatically bad business. They build relationships. They lead to referrals. They fill schedule gaps and keep crews moving between bigger projects. But they have to be priced right, or they become a slow drain on your margins that you might not even notice until you’re wondering why a busy month felt profitable and the bank account tells a different story.

The fix is simple, even if it takes some discipline to implement. Calculate your true cost to show up. Set a minimum charge that covers it. Apply a higher overhead percentage to small jobs than large ones, because the math demands it. Use the Contractor Markup Calculator to build that into every quote you write.

And stop apologizing for charging what your time and expertise are worth. You have a truck, tools, insurance, a license, and 20 years of knowing what you’re doing. That has a price. Customers who understand value will pay it. Customers who won’t probably wouldn’t have been worth working for anyway.

Try EstimationPro free and start pricing every job, big or small, with the confidence that the numbers actually work.