Using historical information, overhead percentages generally average between what range?

Overhead percentages are critical in understanding the cost structure of home improvement projects. They typically cover indirect costs not directly tied to labor or materials, such as utilities, office supplies, and administrative expenses. The correct range of 5% to 20% reflects the common industry standards based on historical data.

In many cases, the lower end of this range (5%) accounts for businesses with minimal overhead or those operating very efficiently, while the upper end (20%) might represent larger operations with more extensive administrative and operational costs. This percentage allows businesses to calculate their total project costs accurately and ensures that they can maintain profitability while accommodating varying operational scales.

Overall, recognizing that the average overhead percentage falls between 5% and 20% helps home improvement salespeople adjust their pricing strategies and understand their companies' financial health in relation to industry norms.