Overhead and profit, usually written O&P, is the contractor's markup on top of the direct cost of the work.
What it covers
Overhead is the cost of running the business that is not tied to one job: office, insurance, supervision, vehicles and administration. Profit is the margin the contractor earns for managing the work.
The common 10 and 10
Estimates often add 10% overhead and 10% profit to the line item total. As a simple example, on a line item total of $10,000 that is $1,000 for overhead and $1,000 for profit, for $12,000 in all.
It is not automatic
Whether a carrier pays O&P depends on the policy, the state and the scope of the job. Rules and practice vary, so check the policy and your state's guidance before you rely on it.
On our order form
You choose whether to add overhead and profit at 10% each. If you do not select it, the estimate is written without it.
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