Overhead Calculation Formula
Required Markup %: (Overhead % + Profit %) ÷ (100 − Overhead % − Profit %) × 100
Multiplier: 1 + (Markup ÷ 100)
Example: If overhead is 20% and desired profit is 15%, the markup required is approximately 54% (multiplier of 1.54).
Note: Apply the multiplier to your direct costs to arrive at the selling price.
Overhead Calculator — Builder Overhead & Markup
Australian builders operate on average net margins of 3–5% (MBA Australia, 2024). The difference between profit and loss comes down to correctly calculating overhead recovery and markup.
Typical Builder Overheads
| Category | % of Revenue | Examples |
|---|---|---|
| Vehicle & fuel | 3–5% | Utes, fuel, rego, insurance |
| Insurance | 2–4% | Public liability, HWI, workers comp |
| Office / admin | 2–4% | Rent, phone, software |
| Tools & equipment | 1–3% | Purchases, repairs, hire |
| Licenses | 1–2% | Builder licence, CPD |
Formulas
Markup % = (Overhead + Profit) / Direct Costs × 100.
Margin vs Markup: A 30% markup = 23% margin. A 30% margin = 43% markup.
Frequently Asked Questions
What markup should a builder use?
Most Australian residential builders need 25–40% markup on direct costs to cover overhead (10–18%) and profit (8–15%).
Markup vs margin?
Markup is on cost, margin is on selling price. 30% markup = 23% margin.
How to calculate overhead percentage?
Total annual overheads / annual revenue. E.g., $120k / $800k = 15%.
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