Overhead is what you'd still pay next month if you finished every job tomorrow and won nothing new. It doesn't appear on any job's receipts, so it doesn't appear in job costing unless you put it there, and the way to put it there is a rate: last year's overhead divided by last year's revenue. That rate, plus the net profit you want, is the gross margin every bid needs to carry.
A worked number
Overhead $112,000 on $560,000 of revenue: a 20% rate. With an 8% net target, bids need a 28% gross margin, a 39% markup on cost. A $30,000-cost bathroom priced at 25% gross ($40,000) carries $10,000 of overhead when it needs $8,000 plus $3,200 of profit; the job nets $0 and the owner wonders why a busy year ended broke.
The mistake it hides
The 10% rule of thumb. NAHB's 2026 remodelers' study put operating expenses at 23.6% of revenue, and small residential shops commonly run 25% to 40%. The other mistake is leaving the owner's salary out: if you don't pay yourself in the overhead column, the "profit" on every bid is your paycheck and the business earns nothing.
In Obra
Obra costs jobs, not the business, so overhead lives in the rate you carry into each bid rather than on the projects. The overhead calculator finds the rate from your bank statements, and the overhead guide walks through what belongs in it.