Start with honest hours, then overhead
The job starts as hours multiplied by your hourly rate. The hours have to be the real ones - meetings, revisions, delivery and the admin around the work, not just the build - because everything downstream is priced from them, and a field that rounds the estimate down quietly rounds the profit down with it.
Overhead is a percentage of that labor figure, covering software, insurance, taxes, admin and the idle time between projects that no single invoice is ever sent for. Labor plus overhead is the cost, and the table keeps the two apart, so it is obvious which line moved when the suggested price changes.
Price the margin into the number
Price is cost divided by one minus the margin, which treats the margin as a share of the final price rather than a markup on cost. On a $14,400 cost a 25% margin gives a $19,200 price with $4,800 of profit inside it; a 25% markup on the same cost would reach only $18,000 and leave 20% of the price.
The margin field tops out at 99%, so the divisor never reaches zero and a price always comes back. The table prints the cost, the profit and the profit share of the price, which is the check: if that last line does not match the margin you typed, something in the hours or the overhead is not what you think it is.
The estimate is the risk you carry
In a fixed-fee deal the estimate is the risk. Price a job at a 25% margin and the cost is 75% of the fee; run 25% over on hours and the cost climbs to 93.75% of the fee, leaving 6.25% of profit instead of 25%. Nothing about the fee changes - the overrun comes straight out of the margin.
That is why undefined scope, unpinned boundaries and free changes are expensive rather than merely irritating. Every change quoted separately, and every assumption written into the proposal, is an hour that does not eat the buffer the price was built on.
The price has to survive an overrun
The margin is the gap between the estimate and what the job turns out to be, so it has to be wide enough to absorb the overruns a fixed fee always carries. At a 30% margin the cost is 70% of the fee; run a third over on hours and the cost reaches about 93% of the fee, leaving under 7% of profit.
The honest lever is the hours field. Realistic hours price a job that can actually be delivered, while optimistic hours price a job that looks profitable on the screen and is not in the calendar. The page says so next to the result instead of leaving it to be discovered halfway through the build.
Margin, markup, and the hour that eats both
A 25% margin on $10,000 of cost quotes $13,333, because a margin is a share of the price: $10,000 / 0.75. A 25% markup quotes $12,500, and that price carries a 20% margin, not 25%. The two words differ only by the denominator, and on $10,000 of cost the difference is $833 - about a week of work, given away at the quoting stage.
The hour estimate is where the margin actually dies. At 120 hours and a $100 rate the price contains $3,000 of profit; run 150 hours and labor rises by $3,000, so the profit is gone and the effective rate falls from $100 to $80 on the same fixed fee. A 25% overrun is the ordinary outcome of a scope that was never written down.
Solve for the overrun the fee can absorb: $3,000 of profit against a $120 hourly cost (labor plus overhead) buys 25 extra hours, or 21% of the estimate. Past that line the client is being paid out of your margin, and the invoice never shows the transfer.
Revisions are the usual leak. Three rounds at five hours each is fifteen hours, 12.5% of a 120-hour estimate: either price the rounds in, or put the number of rounds in the proposal and quote anything beyond them at the hourly rate.
Read the effective rate back to yourself before the proposal goes out: fixed fee divided by the hours you genuinely expect, revisions included. If that figure sits below your break-even hourly rate, the project loses money however healthy the margin looks - the margin is a share of a price you have not earned yet.
The proposal is where the number is defended, not the spreadsheet. Name the deliverables, the number of revision rounds, what happens when the client adds a page or a language, and what the hourly rate is for anything outside that boundary; a fixed fee without those four lines is a quote for whatever the client imagines, and the first change request converts your profit into goodwill.
Danfio