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How to price a project with a target margin

Published by Navon Ventures S.A.S · October 27, 2026

A project quote needs a delivery-cost estimate before a target margin becomes meaningful. This model combines estimated labor cost and other project costs, then solves for a price leaving the selected share of revenue after those costs. It does not determine what a customer will pay.

Which inputs to use

Estimated hours

Include delivery, revisions and administration that belong to this project.

Internal hourly cost

Use the cost of providing an hour, not the selling rate you hope to quote, to avoid building profit in twice.

Other project costs

Enter included nonlabor costs not counted in the hourly rate.

Target margin

Enter the percentage of selling price intended to remain after modeled delivery costs.

Formula and worked example

(Hours × internal cost + other costs) ÷ (1 − margin ÷ 100)

Forty hours at $50 internal cost plus $500 of other costs gives $2,500. At 25% target margin, 75% of revenue covers costs: 2,500 ÷ 0.75 = $3,333.33 after rounding. Adding 25% instead gives $3,125 and a 20% margin.

Common interpretation mistakes

Margin belongs in the denominator as one minus the margin, rather than being added to cost. An underestimated workload still produces a correct quote for the wrong cost scenario. Try a higher-hours scenario to see how a change in scope affects the required price, keeping cost definitions consistent.

Assumptions and limits

The target must be below 100%. Tax treatment, financing, demand and omitted costs are excluded. This is not a contract or promise of profit. After completion, use all actual hours in effective hourly earnings and compare the observed result with the original estimate.

You can also explore Effective hourly earnings.