💼 Cost of Doing Business Calculator
Calculate your total daily, monthly, and annual cost of doing business, including all overhead and operating expenses.
Why Track CODB?
Knowing your cost of doing business tells you the minimum revenue you need every day to survive. It's the foundation of pricing — you must charge more than your CODB per unit/hour to be profitable.
Why Most Service Businesses Underprice Their Work
The most common small business pricing mistake is pricing based on competitor rates or gut feel rather than actual cost of doing business. If your overhead — rent, insurance, equipment, software, accounting, marketing, owner's compensation — totals $15,000/month and you only bill 120 hours that month, your break-even rate is $125/hour before a single dollar of profit. Charging $80/hour means losing $5,400 per month regardless of how busy you are.
What to Include in Cost of Doing Business
Direct costs: materials, subcontractors, job-specific supplies. Overhead: rent/utilities, equipment and depreciation, insurance (general liability, E&O, health), professional fees (accounting, legal), software subscriptions, vehicle costs, marketing and advertising, phone and internet, and owner's reasonable salary. Many small business owners exclude their own compensation from overhead calculation and then wonder why they're busy but not profitable.
People Also Ask
Overhead Rate per Hour = Total Monthly Overhead ÷ Monthly Billable Hours. If overhead is $8,000/month and you bill 160 hours, your overhead rate is $50/hour. Any hour you bill must cover at least $50 in overhead plus your direct costs to break even. Adding a 20% profit margin means charging at least $60/hour plus direct costs.
Benchmarks vary by industry. Professional services: 15–30% of revenue. Construction: 10–20%. Retail: 20–35%. Manufacturing: 15–25%. Restaurants: 30–40% (of non-COGS revenue). A business spending more than 35–40% of revenue on overhead (excluding COGS) will struggle to generate meaningful profit.
At minimum annually, before setting rates for the new year. Also recalculate whenever major overhead items change (new lease, new hires, new equipment). Many businesses set prices once and never revisit them, quietly eroding margins as costs rise while rates stay flat.