Overhead and Profit
Definition
Overhead and profit (O&P) is the combined percentage added to estimates to cover indirect business costs and intended profit. Overhead includes rent, insurance, vehicles, tools, and marketing.
Common Questions
Real-World Example
CRM Services' monthly overhead equals $15,000 — each bid includes an O&P percentage to ensure those costs are recovered.
Why It Matters
O&P calculations are the foundation of financial health for contracting businesses.
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