Is this project actually profitable?
A big project fee can hide a thin margin once real hours and costs are counted. This calculator shows the profit, margin, and effective hourly rate behind the number.
What it means
Project profitability is what's left of the fee after labor cost and direct expenses are subtracted, expressed both as a dollar profit and a margin percentage — plus the effective hourly rate the fee actually works out to.
Why it matters
Agencies often quote a fee based on gut feel or the client's budget rather than the hours it will really take. Without checking the math, a project that looks like a win on paper can quietly cost the agency money once labor is counted.
Try it with your own numbers
This project nets $7,100 profit at a 59% margin
$7,100
Project profit
59%
Profit margin
$150
Effective hourly rate
$4,900
Total project cost
Recommendations
- Compare the effective hourly rate against your agency's target billing rate to see if this project pulls its weight.
- Build a 10-15% buffer into hour estimates to absorb scope creep before it eats into margin.
- Track actual hours against the estimate after the project closes so future quotes get more accurate.
Suggested next steps
- Set up this project in your project management tool so hours are tracked against the estimate.
- Turn the agreed fee into an invoice schedule tied to project milestones.
Relevant Sarion features
Keep work moving forward
Deadlines stay visible instead of living in someone's memory.
- Status tracking
- Due dates
- Task checklists
Never lose track of a payment
Overdue invoices get chased before they turn into bad debt.
- Paid
- Unpaid
- Overdue
What's typical
Target project margin
20-35% after direct costs
Healthy effective hourly rate
At or above standard billing rate
Buffer for scope creep
10-15% of estimated hours
What actually moves this number
- Compare the effective hourly rate against your agency's standard billing rate before signing the scope.
- Add a scope-creep buffer to hour estimates rather than quoting the bare minimum.
- Track actual hours against the estimate once the project closes to sharpen future quotes.
Where this usually goes wrong
- Underestimating hours because the estimate only covers the visible deliverable work.
- Forgetting non-billable project management, meetings, and revisions when estimating hours.
- Never comparing the effective hourly rate back to the agency's standard hourly rate.
Common questions
What counts as 'other expenses' in this calculator?
Anything billed directly to the project outside of team time — software licenses, stock assets, contractor fees, or ad spend passed through to the client.
Should I use my billing rate or my actual cost for team hourly cost?
Use actual loaded cost (salary plus overhead divided into hours), not the rate you bill clients. That's what shows true profit rather than revenue.
What if the margin comes out negative?
That means the project is projected to lose money at the current fee and hour estimate — worth renegotiating scope, fee, or both before starting.
Put these numbers to work
Sarion is where the client records, invoicing, and portal behind these numbers actually live.