Overheads are the costs that keep your business running whether you're on a job or not — van finance, insurance, tools, phone, accountancy, fuel. They don't attach to any single quote, which is exactly why they're so easy to forget when pricing one.
What Counts as an Overhead?
If a cost would still be there even without this specific job, it's an overhead. Materials and job-specific travel aren't overheads — they're direct job costs. Your van insurance, tool insurance, phone bill and accountancy fees are overheads, because they exist regardless of which job you're doing this week.
For example: if your fixed monthly overheads come to £2,000 and your monthly revenue is £8,000, your overhead ratio is 25% — meaning a quarter of everything you bring in is needed just to keep the business running, before you've paid yourself anything.
Typical Overhead Costs for UK Tradespeople
| Overhead Item | Typical Annual Cost |
|---|---|
| Van insurance | Few hundred £ upward, varies by risk profile |
| Tools & public liability insurance | From around £75/year, rising with turnover and cover level |
| Tool theft (average claim, if it happens) | £1,200 |
| Accountancy / bookkeeping | £300–£800 |
| Fuel | Varies heavily by mileage and area covered |
Why Overheads Quietly Erode Profit
Overheads don't show up on any single job's invoice, so they're the easiest cost to forget when setting your prices. A tradesperson who only prices in materials and labour, without folding in a share of overheads, is effectively working every job at a discount they never intended to give.
The fix: build overhead recovery into every quote
Work out your overhead ratio, then apply it as a percentage on top of labour and materials on every quote — not just when you remember to. That way overheads get paid for gradually, job by job, instead of being a lump sum that surprises you at year end.
There's No Universal "Right" Overhead Ratio
What's sensible depends on your business model and stage. A business just starting out, still building its customer base, will often carry a higher overhead ratio before income catches up. A well-established one-man band with a paid-off van and minimal kit will usually run leaner. The number itself matters less than knowing it — and pricing it in consistently.