How to price a service project
A step-by-step method for turning an estimate into a fixed price you can defend — and keep a profit on.
Start from what your time really costs
Before you can price a project you need an honest cost for an hour of your work. For a solo freelancer, that is the money the business needs in a year — your pay, overhead and a reserve — divided by the hours you can realistically bill. For an agency it is wages plus a share of overhead per productive hour.
The usual mistake is assuming you will bill every working hour. Admin, sales, revisions nobody pays for, and time off all come out of the year. Many freelancers bill between half and three-quarters of the hours they work.
The method
Work through these in order. Each one builds on the last.
- Break the project into deliverables and estimate the hours for each. Estimating parts is more accurate than estimating the whole.
- Multiply the hours by your internal cost per hour to get labour cost.
- Add direct expenses you will pay only because of this project: stock assets, fonts, plugins, subcontractors, travel.
- Add a contingency — commonly 10–20% — for underestimates and small scope changes. Use more for unfamiliar work or vague briefs.
- Divide the total by (1 − your target margin) to get the price. For a 40% margin, divide by 0.6.
- Sense-check the result: divide the price by the hours. Does that hourly figure match the value of the work and what the market pays?
Protect the price after you quote it
A good price can still lose money if the scope drifts. Write down what is included — the number of revision rounds, the deliverables, what the client must provide and by when — and what happens if something changes. A short change-request process does more for your margin than a bigger contingency.
- List deliverables and revision rounds in the quote.
- State that new requests are estimated and priced separately.
- Track your actual hours so the next estimate is better.
When the number feels too high
If the price you arrive at seems more than the client will pay, change the inputs rather than quietly dropping the margin. Can the scope be smaller? Can some work be done with templates? Is there a cheaper way to source an expense? If none of those work, the project may simply not be worth taking at a price the client will accept — and knowing that before you start is the point of the exercise.