Freelance project quote calculator

Five steps, in this order

1. Estimated hours × your rate = the labour
2. + anything you buy in for the job = the estimated cost
3. + a contingency, as a share of that cost
4. = the cost base
5. ÷ (1 − your margin) = the quote

The contingency goes on before the margin, so the margin covers the buffer rather than being eaten by it. And it applies to the bought-in costs as well as to the hours, because both are estimates, a subcontractor’s invoice overruns as readily as your own time.

The step that costs money: margin is not markup

Asked for a 20% margin on a cost of $3,300, most people add 20% and quote $3,960. That is a 20% markup, and the margin it actually leaves is 16.7%. A true 20% margin needs $4,125, you divide by 0.8 rather than multiplying by 1.2.

The gap is about a fifth of the profit, every time, on every job. This tool divides, and shows the markup equivalent next to the answer so you can see which number you meant.

A margin on a costed rate is not your wage

Worth being clear about, because it is where quoting advice quietly contradicts itself. If your hourly rate is properly costed, it carries your income, your tax, your software and your unpaid hours, then adding a margin on top is not paying yourself more. It is profit for the business, a premium for taking on the risk of a fixed price, and the money that pays for the quotes you write and do not win.

Both readings are defensible. What is not defensible is counting the same money twice: setting a rate that already includes your salary, adding a 25% margin, and then thinking of the margin as your pay as well.

What a contingency is actually for

Not for scope the client adds. That is a change order, and a contingency used to absorb new work trains everyone involved that new work is free. It is for the estimate being wrong about the work you already agreed on.

So it should follow your confidence rather than habit. Familiar work for a familiar client might carry 10%; a new technology, an unclear brief, or a dependency on somebody else’s deadline routinely takes 25% to 50%, and experienced estimators will tell you it is often still not enough. The percentage is abstract, so the tool shows the extra hours it buys, four hours of slack on a forty-hour job is easier to judge than “10%”.

Where the job stops paying

The last figure in the panel is the one to keep. It is the number of hours at which the quote has covered your bought-in costs and nothing more, every hour after it is unpaid.

Quote forty hours at $75 with a 10% contingency and a 20% margin and the job breaks even at fifty-five hours. That is how much room a fixed price has bought you, stated as a number rather than a feeling, and it is the fairest way to compare two quotes: the bigger total is not always the one with more room in it.

What this does not do

It does not add sales tax or VAT, which goes on the invoice and was never yours. It does not model payment terms, a deposit, a late payment or a job that is cancelled halfway. It does not know your market, so it will happily produce a number no client will pay.

And it is an estimate, not a promise: it holds exactly as long as the scope does. Write down what “finished” means before sending the figure, because a fixed price against an undefined scope is not a quote, it is an option the client gets to keep exercising.