How to Price a Fixed-Fee Project Without Undercharging

Start with delivery hours

Estimate the time required to actually create or deliver the work.

Suppose that is 40 hours. At a target rate of $100 per hour:

40 × $100 = $4,000

Add project and administration time

Now estimate the extra time required to manage the project.

Suppose you expect five hours of meetings, project management and communication.

Your total hours are now 45 hours, so your labour value becomes:

45 × $100 = $4,500

That extra five hours is real work. If you do not include it in the quote, you effectively perform it for free.

Add external costs

Suppose you need $500 worth of external services or assets to complete the project.

Your base project value becomes:

$4,500 + $500 = $5,000

External costs might include subcontractors, software, stock assets, travel, specialist services or production expenses.

Add contingency

Projects rarely unfold exactly as predicted.

A contingency gives you some room for normal uncertainty.

Suppose you use a 10% contingency:

$5,000 × 10% = $500

Your project value after contingency becomes:

$5,500

This does not mean you should tolerate unlimited scope changes. A contingency is a pricing buffer, not permission for the project to grow indefinitely.

Add your markup

Suppose you apply a 20% markup to the project after contingency:

$5,500 × 20% = $1,100

Your recommended project quote becomes:

$6,600

This gives you a clearer picture of what the project needs to be worth than simply quoting the original $4,000.

Check the effective hourly rate

The project uses 45 hours of your time.

If the final quote is $6,600:

$6,600 ÷ 45 = $146.67 per hour

This effective hourly rate includes more than your basic labour rate because the quote also covers external costs, uncertainty and markup.

That is why it should not be interpreted as pure hourly earnings.

Contingency does not replace scope control

If the client asks for substantially more work than originally agreed, that may be a scope change.

Your quote should clearly define what is included.

Examples can include the number of concepts, revisions, pages, meetings or deliverables.

A good fixed price works best when both sides understand what the fixed price actually covers.

Markup and margin are not the same thing

Price My Time's Project Pricing Calculator uses a markup.

For example, a 20% markup means multiplying the project value by 1.20.

Accounting profit margin is calculated differently.

We deliberately label this clearly so you know what the calculator is doing.

Calculate your project price

Use the Price My Time Project Pricing Calculator to combine delivery hours, admin time, your target rate, external costs, contingency and markup.

You will see the full calculation as well as your estimated effective hourly rate.

What if the project price looks too high?

Do not immediately cut the number.

First look at why it is high.

Is your time estimate unrealistic?

Are the external costs necessary?

Is the scope too large?

Is the client expecting too many revisions?

Sometimes a high quote is telling you that the project is bigger than it first appeared.

You may also find How to Price a Monthly Retainer and What Counts as Billable Time? useful.