Project-Based Pricing: How Agencies Protect Their Margins

You quoted $15,000 for a website project. The client said yes. Three months later, you’ve logged 200 hours, dealt with four rounds of “small changes,” and your effective hourly rate is somewhere around $75. Before overhead.

Most agencies get project pricing backwards. They estimate hours, multiply by their rate, add a little buffer, and hope for the best. Then scope creep eats the buffer. Then the buffer after that.

This guide covers the pricing formula that actually protects your margins, how to scope projects so you don’t give away free work, payment structures that keep cash flow healthy, and what to do when things go sideways. Everything here comes from agencies who’ve figured out how to make project work profitable, not just busy.

When project-based pricing works for agencies

Project-based pricing works best when you can define what done looks like before you start.

Good fit for project pricing:

• Web design and development with defined deliverables (10-page site, e-commerce store, landing page).

• Brand identity packages where scope is clear (logo, brand guidelines, collateral templates).

• Audits and assessments with a fixed output (SEO audit, security review, UX analysis).

• Content packages with countable deliverables (ebook, video series, website copy for X pages).

• Migration projects with a clear end state (platform moves, URL restructures, site consolidations).

“Project-based pricing works best for small businesses needing complete website builds or rebrands,” says Harmanjit Singh, Founder and CEO at Origin Web Studios. “A local renovation company gets a clear upfront cost for their entire website project, making budgeting straightforward.”

One caveat: if you’re delivering the same service repeatedly with minimal variation—same audit format, same brand kit components, same landing page structure—you don’t need to scope each engagement from scratch. That’s a sign you've productized the service, and fixed cost pricing with defined packages will save you proposal time while giving clients clearer options upfront.

Poor fit or needs careful scoping:

Set a minimum project fee to filter out bad-fit clients

One pattern that kills project profitability: small-budget clients with big-budget expectations.

“Don’t give steak to a meatloaf client,” as u/SpaceChimpp put it on r/agency. “The deliverable should match what they pay.” Clients with champagne tastes and beer budgets consume disproportionate management time. They request more revisions, question more decisions, and treat a $3,000 project like a $30,000 one.

The fix is a minimum project size. Most agencies land somewhere between $5,000 and $10,000 depending on the service. If a prospect flinches at your floor, they’re telling you something useful.

Test it early: “Our projects typically start at $X. Does that align with your budget?” Ask this in discovery, not after you’ve spent four hours on a proposal.

u/bbcard1, a 23-year agency veteran on r/smallbusiness, shared what happened when he started enforcing minimums: “I found letting go a lot of clients that were going over budget did not have any impact on my bottom line. There was a small hit on top-line, but I really wasn’t making any money on them.”

How to calculate your project price

Most agencies price projects by estimating hours and multiplying by their hourly rate. This feels logical but misses the point. You end up anchored to time instead of value, and any estimation error comes straight out of your margin.

A better approach: start with what the project actually costs you to deliver, then work backwards to a price that keeps you profitable even when things take longer than expected.

Start with your delivery cost

Before you can price a project, you need to know what it costs you to deliver it. Not what you want to charge. What it actually costs.

Delivery cost includes:

• Labor: Hours per team member × their cost per hour (salary + benefits + overhead, divided by billable hours).

• Pass-through expenses: Stock images, fonts, hosting setup, third-party tools, subcontractor fees.

Here’s what this looks like for a typical website project:

This is your floor. Charge less than $15,000 and you’re losing money before you’ve made a single dollar of profit.

Most agencies stop here and add 20% for profit. That’s a mistake. A 20% markup on $15,000 gets you to $18,000, which sounds reasonable until the project runs 30% over hours. Now you’re back to break-even or worse.

Target 70% delivery margin

Industry standard advice says aim for 50% margins. Most agencies following that advice end up closer to break-even once they account for everything: bench time when people aren’t billable, PTO, training, overhead that doesn’t fit neatly into project budgets.

A healthier target is 70% delivery margin. That means your delivery cost should be 30% of your project price.

The formula:

Minimum Price = Delivery Cost ÷ 0.3

For a technical SEO audit with $5,000 in delivery costs:

$5,000 ÷ 0.3 = $16,667 minimum project price

That’s roughly a 3x multiplier on your costs. Feels high until you see what happens when projects overrun:

At a 70% target, even a 30% cost overrun leaves you with a 61% margin. At a 20% markup, that same overrun puts you underwater.

Find the right pricing strategy for your agency

Learn more

The math scales the same way for larger projects. That $15,000 website from the earlier example? The formula says $50,000. Most agencies charge $15,000–$20,000 for the same work and wonder why margins are thin.

If the formula produces a number your market won’t pay, you have three options: reduce delivery cost (tighter scope, templates, junior team members on appropriate tasks), reposition to serve clients who can afford proper pricing, or accept that the service isn’t profitable at current rates. The answer isn’t to accept worse margins.

Add a risk buffer

The 70% margin protects you from normal variation. A risk buffer protects you from the stuff you can’t predict: a new client who’s slower to give feedback, a platform you haven’t worked with before, requirements that seem clear but turn out to be vague.

“Everything we do is project pricing,” u/fender1878 shared on r/Wordpress. “I see how many hours it’ll take, throw a buffer and create a project price.”

How much buffer depends on how much you don’t know:

Apply the buffer to your minimum price, not your delivery cost. On that $50,000 project with a new client and some custom requirements, a 20% buffer brings you to $60,000.

Some agencies build the buffer into their margin target instead (aiming for 75% instead of 70%). Either works as long as you’re consistent about it.

Pricing returning clients

Repeat clients are easier to scope. You know their communication style, approval process, and how likely they are to request changes. That reduced risk is worth something.

But it doesn’t mean you should automatically discount.

For similar projects, use your actuals from last time as the baseline instead of estimating from scratch. For different project types, run full discovery. Familiarity with a client doesn’t mean you can accurately estimate work you haven’t done for them before.

“One of those started as 1k a month and ended as 200k a year,” u/DearAgencyFounder shared on r/agency about a client relationship that grew over time. Good clients compound. Price the current project fairly and let the relationship value build.

If a client has predictable ongoing project needs, consider an annual agreement: four quarterly projects at a 15% discount, billed quarterly. You get predictable revenue, they get priority scheduling and a better rate.

How to scope projects without losing money

Pricing is half the equation. The other half is making sure what you priced is what you actually deliver.

Scope problems kill project profitability in two ways. First, you spend hours on proposals for prospects who can’t afford you. Second, you deliver more than you quoted because the boundaries were never clear.

Both are fixable before the project starts.

Qualify budget before detailed scoping

Don’t spend three hours on a proposal for someone who has $2,000 to spend on a $20,000 project.

Budget qualification should happen in the first conversation, not after you’ve invested time in discovery and scoping. A simple question works: “Our projects typically range from $X to $Y depending on scope. Does that align with what you’re budgeting?”

If they can’t give you a number, give them yours and watch the reaction. Hesitation or sudden schedule conflicts tell you what you need to know.

“Never price based on hours,” u/ashrosen advised on r/Wordpress. “Price based on pages designed and developed… then you have to factor in the client. If they are giving you a weird gut feeling add 20-40% more.”

That gut feeling matters. Some clients are easy to work with; others will burn hours in meetings, request extra revisions, and question every decision. You can’t always quantify it, but you can price for it.

When prospects ghost after receiving a proposal, the problem usually isn’t the proposal. It’s that budget expectations were never aligned. They were expecting $8,000 and you quoted $25,000. Qualifying early saves you from writing proposals that were dead on arrival.

Create a detailed scope document

Don’t treat a scope document as a formality, but as your defense against the “I thought that was included” narrative.

Every scope document should cover:

• Deliverables: Specific, countable outputs. “15-page website with responsive design,” not “a website.”

• Features included: Every piece of functionality, listed explicitly. If it’s not on the list, it’s not in scope.

• What’s NOT included: Hosting, ongoing maintenance, content creation, SEO, training. Spell it out.

• Timeline and milestones: Project start, key checkpoints, final delivery date.

• Client responsibilities: When they owe you content, feedback windows, who has approval authority.

• Acceptance criteria: How you’ll both know the project is “done.”

• Revision policy: How many rounds, what counts as a revision, what happens after.

The client signs this before you start work. No signature, no start date.

“Nail down in writing what ‘complete,’ ‘finished,’ ‘done’ mean,” u/tilario wrote on r/Wordpress. “Include rates for change requests during project AND after completion.”

Store scope documents somewhere both parties can reference them. If you’re using SPP, the client portal keeps everything in one place: scope, approvals, change orders, communication history. When a client says “I thought we agreed to X,” you can both look at the same document.

Set revision limits upfront

“Just one more tweak” is how project margins die. Without defined limits, revisions expand to fill whatever patience you have left.

Two revision rounds is standard for most agency work. The first round catches major issues, the second handles refinements. After that, you’re doing new work, and new work costs money.

Your scope document should specify:

• How many rounds: “Two rounds of revisions included.”

• What counts as a round: All feedback submitted together within X business days, not drip-fed over weeks.

• Response windows: “Feedback due within 5 business days of delivery.”

• What happens after: “Additional revisions billed at $150/hour, 2-hour minimum.”

Be clear about what counts as a revision versus new work. Adjusting the color of a button is a revision. Adding a new page is new work. Moving a form from the sidebar to a modal might look small to the client but could require significant development time.

When a client asks for round three, the conversation is easy if you’ve set expectations upfront: “We’ve completed the two revision rounds included in your project. Additional refinements are $150/hour with a 2-hour minimum, or we can note these for phase two. Which works better?”

No guilt, no awkwardness. Just referencing what you both agreed to.

How to structure project payments

Pricing protects your margins. Payment structure protects your cash flow.

The wrong payment terms leave you financing client projects out of your own pocket, chasing invoices while your team waits to get paid. The right structure keeps cash coming in at every stage and filters out clients who aren’t serious.

The 50/25/25 payment structure

For most agency projects, 50/25/25 hits the right balance:

• 50% deposit before work begins

• 25% at midpoint (design approval, development halfway, or similar milestone)

• 25% on completion

“We recently started doing 50% up front, then 25% after the first revision round, then 25% prior to launch,” u/ashrosen shared on r/Wordpress. This structure is the most common recommendation across agency communities for good reason.

The 50% deposit covers your initial costs and proves the client is serious. Anyone who balks at a deposit is telling you something about how the rest of the project will go. The midpoint payment keeps cash flowing during the longest phase of work. The final 25% is small enough that clients don’t drag their feet on approvals just to delay payment.

One critical detail: tie your final payment to deliverable completion, not launch.

“The final milestone should only ever be ‘Site is Ready to Launch’ — when development and QA is complete,” u/DebtySpaghetti warned on r/Wordpress. “Never ‘Site is Launched.’ I’ve seen a million dollar project never launch due to internal power struggle. Another client took 6 years to launch their new site.”

Your contract language should read “final payment due upon delivery of completed files” or “final payment due when site is migration-ready.” Not “final payment due at launch.” You control when deliverables are ready. You don’t control when clients flip the switch.

Alternative payment structures

50/25/25 works for most projects, but not all. Smaller projects don’t justify the invoicing overhead. Longer projects need more frequent milestones.

“Anything under $15k project value, we would always do as 100% upfront,” u/tankydee shared on r/Wordpress. “It’s not really even worth invoicing twice in these instances, too much overhead really.”

100% upfront sounds aggressive, but for smaller projects it makes sense. You eliminate invoice chasing entirely, the client is fully committed from day one, and you’re not managing accounts receivable on a $6,000 project. If a client won’t pay upfront for a small project, that hesitation usually signals problems ahead.

For longer projects, more milestones keep both sides accountable. A six-month build with only two payment points creates too much space for things to drift. Monthly or milestone-based invoicing keeps the project moving and cash flowing.

Cancellation and refund policy

Projects get canceled. Clients run out of budget, priorities shift, companies get acquired, key stakeholders leave. Without clear termination terms in your contract, you’re left negotiating from a weak position when it happens.

The principle: you keep payment proportional to work completed, plus something for the opportunity cost of holding the slot.

A few contract terms to include:

• Deposit is non-refundable. This is standard. The deposit covers your scheduling commitment and initial work.

• You retain all work until final payment. Don’t hand over files hoping the check clears.

• You can terminate if the client is unresponsive for 30+ days or payment is 30+ days overdue.

• Source files: Specify whether they’re included or available for an additional fee. Ambiguity here creates arguments later.

Sometimes clients need to pause, not cancel. Offer a middle ground: “We can pause for up to 60 days with your current payment securing your spot. After that, we’d need to re-scope based on availability.” This gives them flexibility without leaving you in limbo indefinitely.

Automate payment collection

Manual invoicing doesn’t scale. When you’re managing five projects, you can track who owes what in a spreadsheet. At fifteen projects, things slip through.

Set up systems that handle the mechanics:

• Milestone-based invoicing: Automatically trigger invoices when projects hit specific stages.

• Payment reminders: Automated follow-ups at 3, 7, and 14 days overdue.

• Client self-service: Let clients pay through a portal instead of waiting for you to send a link.

• Status tracking: See who’s paid, who’s overdue, and who’s approaching their next milestone.

SPP.co handles this through integrated billing and client portals. Whatever tool you use, the goal is removing yourself from the payment collection process so you can focus on delivery.

Preventing scope creep

You can price a project perfectly and still lose money if the scope expands without the price following.

Scope creep is the margin killer. “Just one small change” repeated over three months tanks your effective hourly rate. The project that looked profitable at signing becomes a break-even slog by delivery.

The fix isn’t saying no to everything. Clients have legitimate needs that emerge during a project. The fix is having a system that catches scope changes early, prices them appropriately, and gets approval before work begins.

Recognize the warning signs

Scope creep rarely announces itself. It shows up as reasonable-sounding requests that accumulate until you realize you’re building something different from what you quoted.

Watch for these patterns:

• “Can you just add one small thing?” — The word “just” is doing a lot of work here. Small things add up.

• “I saw our competitor doing X, we should add that too” — Competitive anxiety mid-project is a red flag.

• “This looks good, but now I think we need…” — Approval that isn’t actually approval.

• “I’ll know what I want when I see it” — No clear acceptance criteria means endless revisions.

• New stakeholders joining mid-project — Fresh eyes with fresh opinions who weren’t part of the original agreement.

• Reluctance to approve completed phases — Keeping things “open” to avoid commitment.

None of these are inherently unreasonable. Clients aren’t villains for having new ideas. But each one is a signal that scope is shifting, and shifting scope needs to be addressed immediately, not absorbed silently.

The moment you do out-of-scope work without a change order, you’ve set a precedent. The client now expects that flexibility for free. Resetting that expectation mid-project is much harder than holding the line from the start.

The change order process

The golden rule from agency communities: if it’s not in the SOW, it’s a change order. No exceptions.

This sounds rigid, but it’s actually freeing. You’re not deciding case-by-case whether something “should” be included. You’re referencing a document you both signed. The conversation becomes factual, not negotiable.

When a client requests something outside scope:

1. Acknowledge the request. Don’t dismiss it or make them feel difficult for asking.

2. Reference the scope document. “That feature isn’t in our current scope. Let me put together a change order.”

3. Provide cost and timeline impact. Usually within 24-48 hours.

4. Get written approval before starting. No verbal “sure, go ahead.” Signed change order or nothing.

The script is simple: “Since this wasn’t in our original scope, I’ll create a change order. This would cost $X and extend timeline by Y days. Should I prepare that?”

For pricing change orders, use the same methodology as your original project. Base rate times estimated hours, plus a rush fee if it impacts timeline. For small changes under two hours, set a minimum ($300-500) so you’re not nickel-and-diming but also not giving away time.

“For complex projects, a paid discovery is a life saver,” u/muazzam86 noted on r/Wordpress. “Get paid three times — once for the discovery, second for the project, third for the monthly hosting,” u/JGatward added. “This is how you make a decent living from the industry.”

The same principle applies to change orders. If someone wants more, they pay more. That’s not adversarial. That’s how professional services work.

How to transition from hourly to project-based pricing

If you’ve been billing hourly, switching to project pricing feels risky. You’re trading a predictable hourly rate for a fixed number that might be wrong.

But hourly billing has its own risks. You’re penalized for getting faster. Clients watch the clock instead of focusing on outcomes. And you’re always one slow month away from cash flow problems.

The transition doesn’t have to be all-at-once. Start with new clients, gather data, then migrate existing relationships when you’re confident in your pricing.

Analyze your historical project data

Before you can price projects accurately, you need to know what projects actually cost you. If you’ve been tracking time on hourly work, you already have this data.

Pull your completed projects from the past 12 months and calculate:

• Actual hours by task type: How much design, development, PM, QA?

• Effective hourly rate: Total project revenue divided by total hours spent. This is what you actually earned, not what you billed.

• Which projects exceeded estimates: What went wrong? Client delays, unclear requirements, unfamiliar technology?

• Which projects were most profitable: What made them different?

• Scope creep patterns: Same client? Same service type? Same project manager?

Most agencies discover their effective hourly rate is 20–40% lower than their billable rate once they account for unbilled time, scope creep, and revision cycles.

Use this data to build project templates. If your last five website projects averaged 180 hours across design, development, and PM, that’s your baseline for the next one. Adjust for complexity, add your margin and buffer, and you have a defensible project price rooted in actual performance, not guesswork.

Start with new clients

Test your project pricing on people who don’t know your hourly rate. New prospects have no anchor to compare against, so you can quote $25,000 for a website without them calculating backwards to your hourly rate.

Quote confidently and watch what happens. Track your close rate over 10–15 conversations. If you were closing 30% of proposals on hourly and you’re still closing around 30% on project pricing, your numbers are in the right range. If close rates drop significantly, you may be pricing too high for your market or positioning.

A close rate above 50% is a warning sign too. You’re probably underpriced and leaving money on the table.

This testing phase usually takes 2–3 months. By the end, you’ll have real market feedback on your pricing and confidence that the numbers work before you have the harder conversation with existing clients.

Migrate existing clients strategically

Existing clients know your hourly rate. They’ll do the math when you quote a project price. The transition requires more finesse.

Three approaches that work:

• Grandfather: “Our ongoing relationship stays at your current rate. New projects use project-based pricing.” This avoids conflict but creates a two-tier system you’ll eventually want to consolidate.

• Renewal transition: “At your next renewal, we’re moving to project-based pricing. It gives you budget certainty upfront.” Frame it as a benefit to them.

• Incentive: “10% discount on your first project-based engagement if you commit by [date].” Rewards early adopters.

“Do not drop your prices, offer a smaller entry service instead so clients see your value without you discounting your worth,” u/devmakasana advised on r/agency.

The same principle applies here. If a client pushes back on project pricing, don’t discount to match their hourly math. Offer a smaller scope instead. A $15,000 project that’s too expensive becomes a $10,000 project with fewer features, not a $15,000 project at a lower margin.

Some clients won’t make the transition. That’s okay. If they only valued your hours and not your outcomes, they were probably undervaluing you anyway.

How to present and defend your project price

Calculating the right price is one skill. Getting clients to say yes is another.

Most pricing objections aren’t about the number itself. They’re about understanding what they’re getting, feeling confident the price is fair, or comparing you to alternatives they don’t fully understand. How you present the price matters as much as what the price is.

Lead with outcomes, not hours

Clients don’t buy hours. They buy a website that generates leads, a brand that stands out, an audit that reveals opportunities. Frame your price around what they get, not what you do.

Weak: “This project will take approximately 120 hours. At our blended rate, that comes to $18,000.”

Strong: “This website will give you a professional online presence that converts visitors into leads. Based on similar projects, clients typically see a 30-40% increase in inquiries. The investment is $18,000.”

The first framing invites negotiation on hours; the second focuses on value delivered.

A few phrases that help:

• “The investment for this project is…” instead of “the cost.”

• “This includes…” to emphasize bundled value.

• “Based on similar projects, you can expect…” to tie price to outcomes.

When you anchor on outcomes, the price becomes a question of ROI rather than hourly math. A $25,000 website that generates $100,000 in new business is a different conversation than 250 hours at $100/hour.

Handle common objections

Here’s are a few scenarios you will come across.

“Can you break down the hours?”

Clients ask this to find line items to cut or to compare you against hourly freelancers. Don’t take the bait. Itemizing hours undermines the entire point of project pricing.

Your response: “I price projects based on deliverables and outcomes, not hours. This actually protects you. If the project takes longer than expected, your price stays the same. You’re paying for a completed website, not time spent. I can break down what’s included if that helps.”

If they insist, offer to remove scope, not discount time. “I can reduce the price by removing the blog setup and custom contact forms. That would bring it to $X.”

“Your competitor quoted half that.”

Don’t panic; don’t match; differentiate.

“That’s premium positioning, and it’s very hard to maintain… Clients are expecting an expert at those prices,” u/Phronesis2000 observed on r/agency.

Your response: “There’s a wide range of pricing in this industry. It usually comes down to experience level, who’s actually doing the work, what’s included versus extra, and track record. Our pricing reflects [your differentiator]. If budget is the primary concern, I’m happy to adjust scope, but I won’t compromise on quality.”

When to walk away: they’re shopping purely on price, the budget gap is more than 40%, or the negotiation feels adversarial.

“99% of the time it’s not a pricing issue, it’s the issue of the market you are targeting and the people you are speaking with,” u/its_akhil_mishra noted on r/agency. If you’re consistently hearing price objections, the problem might be positioning, not pricing.

Price rush work appropriately

Rush fees aren’t a penalty. They’re compensation for the disruption to your schedule and the opportunity cost of bumping other work.

Present it as a choice, not a surcharge: “I can accommodate that timeline with a rush fee of 25%, bringing the total to $31,250. Alternatively, if we extend to [date], we keep the original price at $25,000. Which works better for you?”

Giving them options keeps the conversation collaborative. Some clients genuinely need speed and will pay for it. Others have artificial urgency and will take the standard timeline when the alternative costs more.

Common project-based pricing problems

Even with solid pricing and clear scope, things go wrong. Projects run over, clients dispute invoices, and sometimes you realize mid-project that you priced too low.

The goal isn’t to avoid problems entirely. It’s to have a playbook for when they happen.

“I underpriced this project” / “It’s taking way longer than estimated”

Same root problem, different symptoms. You’re bleeding margin because your estimation was off.

First, diagnose the cause:

• Scope creep? Stop work, document the out-of-scope requests, present a change order before continuing.

• Bad estimation? Fulfill the commitment, document what you missed, fix your process for next time.

• Client delays? Reference your contract, communicate the timeline impact, consider charging for the disruption.

If you genuinely underpriced the work, the short-term answer is uncomfortable: deliver what you promised anyway. Don’t cut corners on quality. Don’t ask the client to pay more for something you agreed to. Document your actual hours and costs meticulously so you learn from it.

The long-term fix is what matters:

1. add this project to your pricing database with real numbers

2. identify the gap (was it discovery? new technology? difficult client?)

3. increase your risk buffer on similar projects to 25–30%

4. improve your discovery process to catch complexity earlier

5. track estimated versus actual on every project going forward

What not to do: rush the work and compromise quality, resent the client for your pricing mistake, or avoid similar projects entirely. The project type isn’t the problem. Your estimation process is.

“Client is disputing the final invoice”

Your defense is the paper trail. Reference the signed scope document, show the change order history, provide the deliverables checklist with completion dates.

Your response: “Let me walk through what we agreed to. Original scope was $X, change order in March added $Y, bringing the total to $Z. All deliverables have been completed and approved. I’m happy to review the scope document together if that helps.”

Most disputes dissolve when you can point to signatures and dates. The client may have forgotten what they approved, or a new stakeholder is questioning costs they weren’t involved in. Either way, documentation makes the conversation factual instead of adversarial.

If a client wants a discount because the project took longer than expected, hold firm. Project-based pricing means they pay for the outcome, not the time. “Whether this took us 50 hours or 150, your price stays the same. If we’d billed hourly, this would have cost you more. The fixed price protects you from exactly this scenario.”

Giving a discount now sets a precedent. They’ll expect it every time.

“How do I know if my project pricing is actually working?”

Track these metrics monthly:

Close rate surprises people. Below 15% usually means you’re priced too high or targeting the wrong market. But above 60% is also a problem—you’re probably underpriced and could be charging more.

Warning signs your pricing is broken:

• every project runs over hours → estimation problem, not pricing

• high close rate but low margins → priced too low

• low close rate → priced too high or wrong market

• constant scope creep → scoping problem, not pricing

Quarterly, dig deeper. Review profitability by service type, client type, and project size. You might discover that $10,000 projects consistently lose money while $30,000 projects are your most profitable. That’s useful information for setting minimums and focusing your sales efforts.

Project-based pricing examples by agency type

Theory is useful. Seeing how the math exposes margin gaps on real projects is more useful.

SEO agency: the $5,000 audit that should be $8,000

Here’s a typical technical SEO audit:

Senior SEO strategist: 20 hours × $75/hour = $1,500
Tools and crawling software: $200
Report creation and presentation: 8 hours × $60/hour = $480
Total delivery cost: $2,180

At 70% margin: $2,180 ÷ 0.3 = $7,267
With 15% buffer: $8,357

Most agencies charge $4,000–$5,000 for this work. The formula says $8,000. That gap is where margin erosion lives.

If $8,000 feels high for your market, the $5,000 audit needs to be a smaller scope: 50 pages instead of 200, no competitor analysis, templated report instead of custom. Don’t compress your margin to hit a lower price point.

Web design agency: the $15,000 site that should be $47,000

Here’s a typical 10–15 page marketing site:

Design: 60 hours × $80/hour = $4,800
Development: 80 hours × $90/hour = $7,200
PM/QA: 20 hours × $70/hour = $1,400
Content entry: 10 hours × $40/hour = $400
Stock assets and tools: $400
Total delivery cost: $14,200

At $15,000 price: 5.3% margin — you‘re losing money

At 70% margin: $14,200 ÷ 0.3 = $47,333
Recommended price: $45,000–$50,000

That gap between $15,000 and $47,000 is where most web agencies bleed profit. They price based on what competitors charge or what feels “reasonable” instead of what the work actually costs to deliver well.

If $45,000 is out of range for your clients, that’s useful information. Either reduce what you’re delivering or find clients who need and can afford custom work at that level.

Frequently asked questions

Make project pricing work for your agency

Project-based pricing works when you know your costs, protect your margins, and scope the work clearly before you start.

The 70% margin formula gives you room to absorb estimation errors. Detailed scope documents prevent “I thought that was included” conversations. Payment structures like 50/25/25 keep cash flowing and filter out clients who aren’t serious. Change orders turn scope creep from a margin killer into additional revenue.

None of this requires being adversarial with clients. Clear pricing and clear scope actually make relationships easier. Everyone knows what they’re getting and what it costs.

Start with your next proposal: Calculate your true delivery cost, apply the margin formula, add a risk buffer, and quote with confidence. Track your results over 10–15 projects. Adjust based on what the data tells you.

The agencies that make good money on project work aren’t lucky. They just have better systems.

Deian Isac

Head of Agency Success

With 4+ years at SPP.co and 8+ years in content production, Deian combines practical agency expertise with content strategy leadership. He’s built essential agency tools, conducted dozens of case studies, and leads product demos for agency owners. As Content Lead, Deian transforms his firsthand knowledge of agency operations into actionable resources that help service businesses streamline and scale effectively.