Cost Calculator AI
Business & StartupService Quoting

Service Pricing Calculator

Quote professional service contracts, freelance creative projects, and technical retainers accurately with labor, overhead markups, and net profit margins.

Service Hours & Direct Labor Rate

Project Expenses & Margin Goal

Service Proposal Pricing Formula

Project Price = (Labor Cost + Materials & Subs) × (1 + Overhead %) / (1 - Target Margin %)
  • Direct Labor: Billable technician or consultant hours multiplied by internal hourly pay rates.
  • Overhead Allowance: Covers software, insurance, office rent, and non-billable administrative hours.
  • Target Net Margin: Retained company profit after all labor and overhead expenses are fully covered.

Step-by-Step Worked Example

Scenario: A 20-hour software development project at $50/hr wage, $200 materials, 10% overhead, and 20% profit margin

Calculation Steps:

  1. Direct Cost Subtotal = $1,000 + $200 = $1,200
  2. Overhead Allowance = $1,200 × 0.10 = $120
  3. Total Job Cost = $1,200 + $120 = $1,320
  4. Recommended Project Fee = $1,320 / (1 - 0.20) = $1,650.00
  5. Target Net Profit = $1,650 - $1,320 = $330.00
  6. Effective Hourly Billing Rate = $1,650 / 20 hrs = $82.50 / hour
Result: Submit a proposal fee of $1,650 ($82.50/hour effective billed rate), earning $330 net profit after labor and overhead.

How to Use This Calculator

  1. 1Enter the internal hourly labor wage and estimated project hours.
  2. 2Add third-party software, materials, or freelance subcontractor expenses.
  3. 3Specify company overhead allocation and target profit margin.

Assumptions & Limitations

  • Project scope is fixed without unpaid scope creep.
  • Hourly rate reflects fully loaded or base wage as entered.

Frequently Asked Questions

Should service businesses charge hourly or fixed project fees?

Fixed project pricing based on value and costs is typically more profitable than billing by the hour because efficiency increases your effective hourly earnings without penalizing fast work.

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