Contractors under-recover overhead
Social posts point out that many contractors under-recover $30–$50 per billable hour by miscalculating overhead, and highlighted examples of inflated labor quotes that confuse customers. The thread underscores wide gaps between quoted labor and true per-hour costs—an issue that distorts profitability on panel upgrades and EV installs. ( )
Contractor accounting guides identify a common pricing error: spreading annual overhead across total hours worked instead of using actual billable hours when computing an hourly overhead recovery rate. (constructioncostaccounting.com) Industry calculators and trade blogs report that many service businesses realistically bill only 20–30 hours per technician per week after admin, travel, and estimating, which reduces annual billable hours to roughly 1,000–1,500 and materially raises overhead-per-hour. (intrysys.com) Standard overhead-recovery formulas divide total annual overhead by annual billable hours; using an example of $60,000 in annual overhead divided by 1,200 billable hours yields an overhead charge of $50 per billable hour that must be added to wage and margin. (housecallpro.com) Benchmark guidance places contractor overhead commonly between about 25% and 54% of revenue and recommends setting target net profit between 8% and 15% when building hourly rates or markups. (build-folio.com) Published pricing tools show the real-world effect: calculators aimed at trades suggest hourly charge rates in a broad $85–$150 range to cover overhead, taxes, and a market wage-equivalent for owners seeking roughly $90,000 take-home, illustrating why low quoted labor rates often under-recover costs. (intrysys.com) EV charger installs and panel upgrades expose the gap in practice because a basic Level‑2 charger job typically lists $1,000–$3,000 while panel work can add $500–$5,000 or more, meaning under-recovered overhead on quoted labor quickly erodes margin on the combined scope. ( )
