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Fixed Project Quote Worked Example

Build and reforecast a hypothetical fixed project quote from internal labor costs, outside expense, contingency and a revenue-based margin.

By PriceAndProfit Editorial Updated

The hourly amount is an internal delivery cost, not a selling rate. The quote first adds a 20% contingency to the $2,500 base cost. It then divides the $3,000 budget by the 75% share of revenue available for costs. Multiplying the budget by 1.25 would produce a markup of 25%, not a margin of 25%.

Quote = (40 hours × $50 cost + $500 direct expense) × 1.20 ÷ 0.75
Hypothetical worked values; no market or statutory rates
StepCalculationResult
Base delivery cost 40 × $50 + $500 $2,500
Contingency 20% × $2,500 $500
Total cost budget $2,500 + $500 $3,000
Quote for 25% margin $3,000 ÷ (1 − 25%) $4,000
Planned profit $4,000 − $3,000 $1,000
Actual delivery cost 48 × $50 + $700 $3,100
Actual project profit $4,000 − $3,100 $900
Actual margin $900 ÷ $4,000 22.5%

How to read and reuse this example

During delivery, the project uses 48 hours and $700 of outside expense. Its total cost reaches $3,100, exceeding the budget including contingency by $100. Because the agreed fee remains $4,000, actual profit falls from $1,000 to $900. The margin changes from 25% to 22.5%, a decrease of 2.5 percentage points.

Boundaries and exceptions

This worksheet assumes the whole fee is earned and collectible. A deposit could improve cash timing while leaving the final margin unchanged. Unapproved extra work should be shown as a separate scope scenario. Keep a record of why hours and outside expenses changed so the next quote improves its task estimates rather than simply adding an unexplained percentage.

Method reference: OpenStax: Operating Budgets. Checked October 22, 2026. Capacity, sales and delivery-cost budgets; no market rate assumptions.

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