Project Profitability Tracker

Frequently Asked Questions

How do I track project profitability?

Time-track all hours per project. Revenue per project / fully-loaded cost per hour × hours = profit margin. Aim for 50%+ project margins for service businesses. Below 30% suggests scope creep, mis-estimation, or under-pricing.

Why are my projects unprofitable?

Most common: scope creep (clients add work without changing fee), under-estimation of hours (multiply your gut estimate by 1.5x), unbilled support after delivery, junior staff handling senior work, poor change order discipline. Track variance from estimate by project type to improve estimating.

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Business Information Disclaimer: Estimates only. Not professional business advice.

This calculator provides estimates for informational purposes only. Business results vary by industry, market conditions, and execution. Not a substitute for professional business consulting, accounting, or legal advice. Consult qualified professionals before making business decisions.

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How This Calculator Works

This tracker takes a single project's revenue and decomposes profit in layers. It subtracts direct costs to get gross profit, subtracts allocated overhead to get operating profit, then subtracts labor cost (labor hours × hourly rate) to reach net profit. It also returns net margin, costs as a percentage of revenue, the break-even revenue figure, and - the most actionable output - profit per labor hour.

Why Profit Per Hour Is the Number That Matters

Total project profit hides efficiency. A $30k profit on a 200-hour job ($150/hr) is far better than $40k on 600 hours ($67/hr) because your capacity is your real constraint. Rank projects and clients by profit per labor hour, not by headline contract value - the "big" client is often the least profitable once you account for the hours it consumes. This is the single most useful lens for an agency or services firm.

Get the Overhead Allocation Right

The most-abused input is overhead. Projects that look profitable on direct costs alone routinely lose money once a fair share of rent, software, admin, and non-billable time is loaded in. Common methods: allocate overhead as a percentage of direct labor, by headcount, or by project duration. Whatever you choose, total allocated overhead across all projects should reconcile to actual annual overhead - under-allocating makes every project look artificially profitable while the company bleeds.

Scope Creep and the Estimate-vs-Actual Gap

Project profitability erodes between bid and delivery, almost always through unbilled hours. The defenses: track estimated vs actual hours weekly (not at close-out, when it is too late), define a change-order process so out-of-scope work is repriced rather than absorbed, and re-run this calculator mid-project with actuals. A project trending toward break-even at the halfway mark needs intervention then, not a post-mortem.

Common Mistakes

Costing labor at salary, not loaded cost. True cost is wages plus payroll tax, benefits, and idle time - often 1.25–1.4× base pay.

Ignoring opportunity cost. A break-even project that consumes your best people blocks a profitable one.

Excluding non-billable project work (proposals, revisions, meetings) from labor hours.

Judging by margin alone. A 30% margin on 800 hours can be worse than 20% on 200 - check profit per hour.

Project Profitability Tracker

Frequently Asked Questions

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