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Business Terms
Overhead
Definition
Ongoing business expenses not directly tied to specific projects or products.
Overview
Overhead includes rent, utilities, software subscriptions, insurance, and administrative costs. These must be covered by your pricing even when not billed directly.
Example
A consultant's overhead includes: home office ($500/month), software ($200/month), insurance ($300/month) = $1,000/month.
Best Practices
Track overhead costs and factor them into your pricing. Reduce unnecessary overhead.
Common Mistakes to Avoid
Not tracking overhead
Not including in pricing
Excessive overhead
Frequently Asked Questions
How do I price overhead into my rates?
Calculate total overhead, estimate billable hours, and add overhead per hour to your base rate.