How to Price a Project

The pricing workflow (do these in order)

1. 1

   List every direct cost

   Open a spreadsheet. For this project, what will you spend that you would not spend otherwise?

   • Subcontractor / freelancer fees
   • Stock assets (photos, fonts, illustrations, code)
   • Licences / plugins bought for this job
   • Print, fabrication, manufacturing
   • Hardware resold to the client
   • Payment processing fees (a percentage of the invoice plus a small fixed fee)
   • Travel / materials specific to this project

   Sum these. This is your Cost field in the Margin Calculator.

   On the payment fees: card and wallet processors all charge roughly a few percent plus a fixed amount, but the exact figure depends on your country, the card type the client uses, whether the charge is treated as international, and the plan you are on — and they change. Take the real number from your own provider’s pricing page or dashboard rather than from a guide, because getting it wrong by half a percent on a large invoice is real money and the number is free to check. The worked example below uses 3% as a round placeholder for that reason.

2. 2

   Allocate overheads to this job

   Overheads exist whether this project happens or not. But each project should carry its fair share. Common methods:

   • Time-based: (Your hours on this job ÷ Total billable hours this month) × Monthly overheads
   • Revenue-based: (Project revenue ÷ Total monthly revenue) × Monthly overheads
   • Flat per project: Fixed admin fee (e.g., £200/project) — simple but less accurate

   Enter this in the Overheads field. It drives the Net profit and Net margin figures.

3. 3

   Choose your target gross margin

   This is a business decision, not a calculation. Typical ranges:

   • Pure service (low direct cost): 50–70% gross margin
   • Mixed (some pass-through): 30–50% gross margin
   • Heavy pass-through (media, print, hardware): 15–30% gross margin

   Enter this in Target gross margin. The calculator shows the exact price you need to quote.

4. 4

   Check the net margin

   The calculator shows Net margin (after overheads). If it's below ~15–20%, the project may not be worth the administrative burden unless it's strategic (portfolio, relationship, repeat work).

5. 5

   Round the quote sensibly

   The calculator gives £6,666.67. Quote £6,700 or £6,750. The extra £33–83 is a buffer for scope creep or underestimated hours.

6. 6

   Run the tax calculation

   If you charge VAT/GST, the client pays the gross. Your net revenue is the quote. Use the Tax Calculator in Tax exclusive mode to confirm the gross total the client sees.

7. 7

   Build the invoice

   Use the Invoice Generator. Reference the quote number in the PO field. The invoice total should match the quoted price exactly.

Worked example: a website project priced to a 50% margin

The subtlety is that payment fees are a percentage of the price you are still in the middle of choosing, so you cannot simply add them to the costs and divide. If you divide first and add the fee afterwards, the margin comes out slightly under target every single time. Solve for the price instead:

Then the quote itself, checked back:

Note that the gross margin lands on 50.0% and not slightly under it, which is the whole point of solving rather than dividing. And note that the 6 percentage points between gross and net margin are not a rounding error — they are the cost of running a business during the two months you are waiting to be paid.

Common pricing traps

• !
  Marking up cost instead of solving for margin. Marking the £2,074.50 cost up by 50% gives £3,111.75 — and a margin of 33.3%, not 50%. Always check the result, because the two numbers feel identical and are not.
• !
  Forgetting payment fees. 3% of the £4,150 quote is £124.50. Three percent of revenue comes straight off the margin, and it lands whether or not you remembered to budget for it.
• !
  Ignoring overheads. A 50% gross margin becomes 44% net. Six points of a small business is the difference between replacing your own time and funding a pension.
• !
  Quoting net when the client expects gross (or vice versa). Always write it down explicitly, and make the quote say “excluding VAT” where VAT applies.
• !
  No buffer for scope creep. Round up rather than down. Clients expect a round number, and a quote with no slack in it has no room to absorb one awkward extra request.

Deposit and milestone pricing

Split the quoted price into milestones. Common patterns:

• 50/50: 50% deposit on sign-off, 50% on delivery. Simple, protects both parties.
• 30/40/30: 30% deposit, 40% at mid-point (design approval), 30% on launch. Better cash flow for longer projects.
• Monthly retainer: Fixed fee per month for ongoing work. Price from your target net margin + overheads.

Each milestone gets its own invoice with its own sequential number. Reference the project and quote in the notes.

Retainer vs project pricing

Try the calculators

• Profit Margin Calculator — enter cost, overheads, target margin → get the exact price to quote
• Tax Calculator — confirm the gross total the client pays
• Invoice Generator — build the professional PDF invoice

These figures are estimates for planning and quoting. They are not accounting advice, and do not account for income tax, corporation tax, or currency conversion on cross-border work.