Calculate the additional delivery cost.
Estimate the extra work and the work you can reuse. Multiply additional hours by your loaded hourly delivery cost, then add separate external costs. Loaded cost is the cost of doing the work; it differs from a client billing rate.
Additional cost = additional hours × loaded hourly cost + external costs
Illustrative Harbor request
Eight hours at USD 65 per hour cost USD 520. This example has no separate external costs. If costs are unknown, identify them instead of silently treating them as zero.
An estimate remains an estimate. A confidence range or unresolved dependency can be more useful than a precise-looking total based on uncertain inputs.
See the effect of absorbing the work.
Contribution margin compares project revenue with delivery costs included in your model. It is not business net profit: overhead outside that model, financing and business taxes can change the result.
Contribution margin = (net revenue − delivery cost) ÷ net revenue
| Measure | Before | Absorb change |
|---|---|---|
| Net revenue | $8,000 | $8,000 |
| Delivery cost | $5,200 | $5,720 |
| Contribution | $2,800 | $2,280 |
| Margin | 35% | 28.5% |
Absorbing USD 520 reduces the modeled contribution by USD 520 without changing the fee. You may choose that deliberately. The calculation gives the choice a visible cost.
Use a margin calculation, not a markup.
To give the additional work a target contribution margin, divide its delivery cost by one minus that target.
Net additional fee = additional delivery cost ÷ (1 − target margin)
For USD 520 of cost and a 35% target, 520 ÷ 0.65 = USD 800. Adding 35% to cost produces USD 702: that is a 35% markup, with a margin of about 25.9%.
Charging USD 800 gives combined revenue of USD 8,800 and delivery cost of USD 5,720. The modeled overall margin remains 35%.
This is a calculation method, not a required price. Your agreement, risk, market and chosen response can lead to a different fee. A positive margin target must be below 100%. A zero-revenue project needs separate handling because the margin calculation divides by revenue.
Separate the net fee, tax and client total.
Tax collected for the transaction should not inflate delivery margin. State whether your proposed fee is net of tax or the total including tax.
- Excluding tax: start with the net fee and add tax for the client total.
- Including tax: show the total and calculate its net fee and tax components.
- Custom fee: choose an amount deliberately and check the resulting margin and document totals.
Illustrative tax calculation
At an illustrative 5% tax rate, a USD 800 net fee has USD 40 tax and a USD 840 client total. From the inclusive amount, 840 ÷ 1.05 = USD 800 net.
In Margvant, changing the tax percentage recalculates an inclusive proposed fee while preserving the net fee. Review all three values before confirming the decision.
Tax applicability varies by transaction and location. Confirm it through your accounting process. Percentage arithmetic does not establish tax compliance.
Agree delivery as well as the fee.
Hours estimate cost; additional days describe delivery impact. Record the day basis, required inputs and the effect on the existing schedule instead of automatically converting hours into days.
For an exchange, identify the removed work and eligible cost reduction without counting work twice. For a deferred request, avoid treating a provisional estimate as approved revenue or a delivery commitment.
Put the chosen scope, fee, tax treatment and timing into a client brief, then record approval before issuing an invoice.
Try the workflow with the sample project.
Compare an agreed baseline with a new request, review the costs, choose a response and inspect the client document preview.
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