How the Project Cost Estimator calculates your quote

A strong project quote isn’t a single number — it’s a story your client can understand and you can defend. This calculator uses a simple, audit‑friendly sequence that mirrors how experienced freelancers and agencies price: start with the costs you can justify, add buffers for reality, then layer in profit and tax.

Labor Cost = Estimated Person‑Hours × Blended Hourly Rate. “Person‑hours” means total effort, not calendar time. If the work takes 120 person‑hours and two people share it, the labor cost is still 120 hours of work — it just happens faster on the calendar.

Overhead is the hidden time and expense required to deliver: meetings, planning, status updates, QA, docs, client comms, invoicing, and switching between projects. Even if you don’t “bill” overhead directly, it’s real. This tool models overhead as a percentage of labor: Overhead Cost = Labor Cost × Overhead %. If you’re solo and productized, overhead might be 5–15%. If you’re doing heavy PM or client stakeholder juggling, 20–35% is common.

Fixed costs are one‑time expenses: stock assets, subcontractors, travel, hardware, a copywriter, paid research, user testing, and so on. Tools & subscriptions (per month) capture project‑specific licenses: design software, paid APIs, hosting, monitoring, testing suites, CRM seats, etc. The calculator combines these into “non‑labor costs”:

• Non‑Labor Costs = Fixed Costs + (Tools Monthly × Project Months)

At this point we have a baseline you can defend: Subtotal = Labor + Overhead + Non‑Labor. Subtotal is the number that answers: “What does it cost me to deliver this project if everything goes reasonably well?”

Real projects drift: scope expands, stakeholders add feedback cycles, integration surprises appear, or you discover edge cases late. Contingency is the simplest way to stay profitable without renegotiating every time something tiny changes. The calculator uses: Contingency = Subtotal × Contingency %, then: Cost With Contingency = Subtotal + Contingency. Think of contingency like “insurance.” If the project is highly defined (repeatable landing page), you can use 0–10%. If it’s ambiguous (custom integration, new product), 15–30% is often healthier.

Profit is not a bonus — it’s what funds growth, covers bad debt, absorbs emergencies, and keeps your calendar sane. This tool uses a markup model: Price Before Tax = Cost With Contingency × (1 + Profit %). Markup is easy to explain and works well for fixed‑price quotes. If you prefer margin (profit as % of price), you can approximate by using a higher markup than your target margin.

Some regions require adding VAT/sales tax to invoices. If you collect tax on top of your price, the calculator adds: Tax = Price Before Tax × Tax %, and then: Total Quote = Price Before Tax + Tax. (If your tax situation is different, keep Tax at 0 and handle it separately.)

Clients don’t just buy a deliverable — they buy a delivery date. Timeline is estimated from capacity: each person has roughly 40 hours/week, but only a portion is billable on one project because meetings and other work exist. The calculator uses: Weekly Capacity = Team Size × 40 × Utilization%, then: Weeks ≈ Person‑Hours ÷ Weekly Capacity. This is a planning guide — you should still validate dependencies, feedback cycles, and review time.

A good pricing posture: start with your cost model, then negotiate by changing scope, timeline, or assumptions — not by “cutting your rate.”

Realistic examples you can copy‑paste into a proposal

Use these examples to sanity‑check your quote. Try entering them into the calculator to see the breakdown change. The point is not to match the numbers perfectly — it’s to learn the shape of a healthy estimate.

• Effort: 60 hours
• Rate: $85/hr
• Overhead: 10%
• Fixed: $200 (stock images)
• Tools: $0/mo
• Contingency: 8%
• Profit: 20%

Why it works: low complexity, repeatable work, limited unknowns. You still keep a buffer because clients revise.

• Effort: 220 hours
• Rate: $130/hr
• Team: 2 people
• Utilization: 65%
• Overhead: 22%
• Fixed: $1,500 (contract QA + test devices)
• Tools: $150/mo × 2 months
• Contingency: 20%
• Profit: 30%

Why it works: integrations are where scope creep hides. Higher overhead and contingency reduce “surprise overtime.”

• Effort: 45 hours
• Rate: $200/hr
• Overhead: 25% (prep + stakeholder comms)
• Fixed: $0
• Tools: $40/mo × 1 month
• Contingency: 12%
• Profit: 35%

Why it works: the “work” is not just the workshop — it’s the thinking, synthesis, and clean deliverables afterward.

If your quote is fixed‑price, a milestone plan reduces client anxiety and protects cash flow:

• 30% deposit to begin (reserves calendar time)
• 40% mid‑project after first major deliverable / prototype
• 30% final