Methodology
How the calculation works
Modeled labor cost = total hours × internal hourly labor cost
Total modeled cost = modeled labor cost + direct expenses + payment fees
Economic profit = project fee − total modeled cost
Profit margin % = economic profit ÷ project fee × 100 (fee > 0)
Cash before personal labor valuation = project fee − expenses − payment fees
What each input means
- Client project fee (USD)
- The full project amount before the expenses entered below.
- Total worked hours (hours)
- Include planning, communication, development and testing time.
- Internal hourly labor cost (USD / hour)
- Your value for one hour of your own time. This is separate from your client-facing rate.
- Direct project expenses (USD)
- Out-of-pocket costs for this project; enter 0 when none apply.
- Payment / platform fees (USD)
- A flat amount, not a percentage. Enter 0 when there are no fees.
A worked example
A USD 2,000 project takes 35 hours valued internally at USD 25/hour, plus USD 200 expenses and no payment fees. Labor is USD 875 and total modeled cost is USD 1,075. Economic profit is USD 925.00 and margin is 46.25%. Cash before labor valuation is USD 1,800.
How to use the result
Cash earnings tell you what remains after external costs. Economic profit asks whether that cash also covers the value you assign to your time. Choose your internal rate deliberately, then use the same assumption when comparing projects.
Assumptions & edge cases
- The internal rate is a modeling assumption, not automatically a paid wage.
- Zero revenue makes margin undefined, even if the project has a measurable loss.
- Tax and business overhead not entered as expenses are excluded.
All monetary values are in USD. No currency conversion is performed. Inputs must be non-negative, finite numbers of at most 1,000,000,000; intermediate values are not rounded, and displayed amounts use two decimal places. Very small nonzero values below 0.000001 are not supported.