Agency Pricing Calculator

Calculate agency hourly, project and retainer pricing

Build a cost-based pricing estimate for your agency using your team mix, overhead, billable utilization and target profit margin. The calculator updates instantly as you adjust inputs and shows an hourly selling rate, project total, weekly billing estimate and discounted monthly retainer. All amounts use US dollars.

How to use the agency pricing calculator

1. Enter each role's fully loaded labor cost per paid hour. Include employment costs you want reflected in the estimate, rather than the rate charged to a client.
2. Set mix hours to describe the relative contribution of each role in a representative delivery cycle. A role with 30 mix hours has three times the weight of a role with 10. Add or remove roles as needed, up to ten.
3. Enter overhead as a percentage of labor cost and utilization as the share of paid hours that can be billed. Avoid counting the same expense in both labor cost and overhead.
4. Choose your target profit margin, then enter total project billable hours and duration in weeks.
5. Compare a retainer using monthly billable hours and a discount. Review the resulting margin before offering that discount.

The project hours are separate from mix hours. Mix hours determine the blended cost; project hours determine how much work you sell. Weekly billing divides the project price evenly across the entered weeks and does not model staff capacity or payment milestones.

Pricing formulas and assumptions

The model assumes the same team mix for project and retainer work. It spreads non-billable paid time across billable hours before applying the target margin. Enter rates as decimals in the formulas below, so 20% becomes 0.20.

• Blended labor cost: sum of each role's hourly cost multiplied by its mix hours, divided by total mix hours.
• Cost per billable hour: blended labor cost × (1 + overhead rate) ÷ utilization rate.
• Agency hourly rate: cost per billable hour ÷ (1 − target profit margin).
• Project price: agency hourly rate × project billable hours.
• Monthly retainer: agency hourly rate × (1 − retainer discount) × monthly billable hours.
• Retainer margin: (discounted hourly rate − cost per billable hour) ÷ discounted hourly rate.

Utilization and duration must be positive. Profit margin must be below 100%, because a 100% margin with positive costs cannot produce a finite selling price. Zero-hour projects and retainers are allowed. A zero selling rate has no defined percentage margin.

Worked agency pricing example

Suppose one role costs $40 per paid hour and contributes 30 mix hours, while another costs $60 and contributes 10. Their weighted labor cost is $45 per paid hour. With 20% overhead and 75% billable utilization, each billable hour must recover $72 of cost. A target margin of 20% gives an hourly selling rate of $90.

A 120-hour project at that rate costs $10,800. Spread evenly over four weeks, that is $2,700 per week. A 60-hour monthly retainer with a 10% discount costs $4,860 per month, or $58,320 for twelve identical months. Its margin falls to 11.11%, so the original target margin no longer applies after the discount.

Margin, markup and retainer discounts

Margin measures profit as a share of selling price. Markup measures profit as a share of cost. Adding 20% to a $72 cost gives $86.40, with a margin of 16.67%. To achieve a 20% margin, divide $72 by 0.80 to obtain $90. Use the Gross Profit Margin Calculator to explore that relationship.

A discount reduces revenue without reducing the modeled delivery cost. With a $90 selling rate and a $72 cost, a 20% discount reaches break-even. A larger discount creates an estimated loss. The calculator flags below-cost retainers, but does not automatically change your hours, staffing or expenses.

Use the estimate when preparing a quote

Treat these results as a baseline for the assumptions you entered. Scope changes, subcontractor fees, travel, taxes, payment delays and contingency are excluded unless you incorporate them into your inputs. A flat hourly blend also assumes the role mix stays consistent throughout delivery. If a project uses a materially different mix, update the mix hours before quoting it.

For related calculations, use the Hourly Wage Calculator to explore pay conversions and the Break Even Calculator to examine revenue requirements.