Overhead and Profit

Overhead and profit (O&P) is the amount a contractor adds on top of the direct cost of work to cover the cost of running the business (overhead) and to earn a return (profit). It is often expressed as a single combined percentage.

Overhead covers costs not tied to any one job — office, administration, insurance, and management — while profit is the contractor's earnings. A common shorthand is 10 and 10 (10% overhead, 10% profit), though real numbers vary widely.

O&P is applied to the estimated direct cost, so the accuracy of the underlying takeoff and pricing determines whether the markup actually leaves the intended profit. Keeping that direct-cost base accurate is where Quotr focuses.

For contractors, O&P is how a job pays for the business and generates margin, not just labor and materials. For owners, it explains the difference between the cost of the work and the price they are charged.