Project Rate Estimator
Stop undercharging for fixed-fee projects. Calculate a safe project price that includes risk contingency (scope creep) and guaranteed profit.
Estimation
The Quote Composition
Why the price is higher than just Hours x Rate.
The Risk Buffer (Orange)
This is your insurance policy. If the project goes perfectly, this becomes bonus profit. If it goes wrong, this pays for the extra time.
Net Profit (Green)
This is pure business growth capital. It is separate from your salary (which is covered in Labor Cost).
Effective Rate
You are effectively charging $144/hr. This higher rate compensates for the risk of a fixed bid.
Execution Steps
Estimate the 'Base Hours' to complete the work (be realistic, not optimistic).
Enter your 'Internal Hourly Rate' (Cost basis - see Agency Rate Calculator).
Add a 'Contingency Buffer' (usually 20-30%) for unexpected issues.
Set your desired 'Profit Margin' on top.
The tool gives you the Final Fixed Price to quote.
Pro Strategy
- Never quote based on exact hours. Always add 20% minimum buffer for 'unknown unknowns'.
- If you finish early, the buffer becomes extra profit (reward for efficiency).
- The 'Internal Hourly Rate' should include your overhead (rent, software), not just your salary.
Core Concepts
Scope Creep
Projects almost always expand beyond the original brief. A contingency buffer ensures you get paid for this inevitable extra work.
Value-Based Anchor
Use this calculated price as your internal floor. If the value to the client is much higher, increase the profit margin further.
Fixed Price vs Hourly
Clients prefer Fixed Price for budget certainty. Agencies prefer Hourly for safety. This calculator helps you offer Fixed Price safely.
What is Project Rate Estimator?
This estimator uses a 'Cost-Plus-Risk' model. It starts with the raw cost of labor, adds a risk premium (Contingency) to cover variance, and then adds a target Profit Margin. This structure protects the agency from downside while ensuring healthy profitability.
Best For
- • Quoting fixed-fee projects.
- • Writing proposals for RFPs.
- • Evaluating if a client budget is realistic.
Limitations
- • Depends on accurate hour estimation (which is hard).
- • Doesn't account for opportunity cost (value pricing).
- • Buffer might make you uncompetitive if competitors underprice.
Alternative Methods
Value-Based Pricing
Pricing based on client ROI (e.g. 10% of revenue gain) rather than hours.
Retainer Pricing
Monthly recurring fee for availability rather than specific deliverables.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Web Dev Agency
Constantly going over budget on fixed-fee builds.
Implemented mandatory 25% contingency buffer on all quotes.
Freelance Designer
Clients adding 'just one more edit'.
Calculated price with a 3-revision buffer baked in.
Marketing Consultant
Scope creep on strategy projects.
Used the calculator to set a fixed price that equaled 150% of estimated hours.