Landscaping Overhead Costs: How to Calculate and Recover Them

Most landscaping businesses that fail don’t fail because they’re bad at the work. They fail because the owner never figured out their landscaping overhead costs and never built those costs into the price. You’re out there doing great work, clients are happy, revenue looks solid, and then you check your bank account at the end of the month and wonder where it all went. Overhead is where it went.

This article breaks down what overhead actually is, how to calculate your number, and how to make sure every estimate you write covers it.

What Counts as Overhead (Most Landscapers Miss Half This List)

Overhead is any cost you pay whether or not you’re doing a job. It doesn’t matter if your crew is out working or sitting in the shop, these costs are running.

Here’s what a real overhead list looks like for a 2-truck operation:

Add it up. A typical 2-truck operation is looking at $2,000 to $5,000 per month in overhead before a single worker shows up on a job site. A lot of landscapers who think they’re profitable are carrying $3,500 to $4,000 a month in overhead they’ve never explicitly calculated.

What Should Your Landscaping Overhead Percentage Be?

According to NALP (National Association of Landscape Professionals), overhead runs 20 to 35% of revenue for landscaping companies. That means for every dollar you bring in, 20 to 35 cents is going to overhead costs before you’ve even accounted for the job itself.

NALP also reports that 52% of contractors miss their profitability targets specifically because of inaccurate overhead allocation. More than half. These aren’t bad businesses. They’re businesses that never got their overhead number right.

The industry average net profit margin for small landscaping companies sits at 3 to 10%. The target should be 15 to 20%. The gap between those two numbers is almost entirely overhead that’s not being recovered in the estimate.

Your overhead percentage is: total overhead costs divided by total revenue, times 100. If you’re running $4,000 a month in overhead and billing $15,000 a month, your overhead rate is 26.7%. Every job needs to contribute to covering that.

How to Calculate Your Overhead Rate Per Hour

The hourly method gives you a concrete number you can actually use when you’re building an estimate. Here’s how it works:

  1. Add up all your monthly overhead costs. Be thorough. Use the list above and don’t skip owner salary.
  2. Count your billable hours per month. A 2-person crew working 5 days a week produces roughly 160 to 200 billable hours per month (not 320, because you lose time to drive, load, unload, bid, and admin work).
  3. Divide overhead by billable hours.

Example: $3,500 per month overhead divided by 175 billable hours = $20 per hour overhead burden.

That $20 per hour gets added on top of your labor cost in every estimate. If your crew costs $35 per hour in wages plus taxes, your real loaded labor rate is $55 per hour before you’ve made a dime of profit.

Most landscapers are estimating labor at $35 to $40 per hour and wondering why they can’t make payroll. They’re leaving the $20 overhead burden completely out of the number.

How to Add Overhead to Every Estimate

There are two ways to do this. Use whichever one fits how you estimate.

Method 1: The hourly overhead burden. Calculate your overhead per hour as shown above, add it to every labor hour in every estimate. Simple, consistent, hard to mess up.

Method 2: The overhead percentage. If your overhead equals 30% of your revenue, add a 30% overhead surcharge on top of materials plus labor in every estimate. Some people find this easier when jobs have a lot of material cost.

Example using Method 2: Job with $400 in materials and $240 in labor = $640 base cost. Add 30% overhead: $192. Total before profit: $832. Now add your desired profit margin on top of that.

Either method works. What doesn’t work is skipping it entirely, which is what most guys are doing right now.

If you want to see your real margin including overhead while you’re building the estimate, Greensheets does exactly that. You enter materials and labor, it calculates overhead and margin live so you know your number before you send the quote.

A Real Example: The $1,000 Job That Made $150

Here’s a mulch job that looks profitable on the surface and isn’t.

The client pays $1,000. You break it down:

Looks great. Except you haven’t accounted for overhead.

Now your real cost is $550 + $200 = $750. Your actual net on that $1,000 job is $150 to $200. That’s a 15 to 20% net margin, which is actually fine if you’re hitting that consistently. But most guys think they made $450 on that job and price every job the same way, which means they’re reinvesting phantom profit into growth that doesn’t exist.

And that assumes you priced the job right. Many landscapers would have priced that job at $700 to $750 because it felt like a fair 2x on materials. At $700, after real costs, you lost money.

Why Most Landscapers Underprice Their Work

The number one reason is that 40% of landscaping jobs lose money because overhead isn’t in the estimate. Not because the landscaper is bad at math. Because they never sat down and calculated their full overhead number.

The second reason is confusing gross profit with net profit. These are different numbers.

Overhead sits in between those two numbers. A lot of landscapers look at their gross margin and think that’s what they’re making. It’s not. Most landscapers who think they’re making 30% gross margin are actually making 8 to 12% net after overhead is accounted for.

The third reason is that overhead is invisible. Your crew wages show up clearly on every job. The portion of your truck payment that needs to be covered by that mulch job doesn’t. You have to do the math yourself, or use software that does it for you.

The Fix: Building Overhead Into Your Numbers From Day One

The fix is not complicated. It’s just work most people avoid because it requires sitting down with a spreadsheet for an hour.

Here’s what to do this week:

  1. List every fixed cost you pay monthly. Go through your bank statements. Don’t skip anything. Don’t skip your own pay.
  2. Add them up. That’s your monthly overhead number.
  3. Divide by your monthly billable hours. That’s your overhead burden per hour.
  4. Add that number to every labor hour in every estimate going forward. No exceptions.
  5. Review it quarterly. Overhead changes. You finance new equipment, insurance renews, you hire someone. Recalculate every 3 months.

Once you have your overhead rate, you stop losing money on jobs. You stop wondering where the revenue went. You start knowing, before you send the quote, exactly what you’re going to net if you land it.

The landscapers hitting 15 to 20% net margins aren’t necessarily better at the work than you. They know their overhead number and they price for it every single time.

Stop guessing on margin. Greensheets builds overhead into every estimate automatically, so you see your real margin live while you’re building the quote. At $20 per month, it costs less than an hour of your time to have that number in front of you on every job.