Costing a project accurately, working out the time, cost and resources genuinely required before quoting, protects margin and prevents the quiet erosion that comes from underpricing, and doing it properly means accounting for more than the obvious direct costs alone.
These are the elements a proper project costing genuinely needs to include.
Account for genuine direct costs completely
Materials, direct labour and any items purchased specifically for the project are the most obvious costs, but they still need to be estimated realistically and completely, including items easy to overlook like transport or delivery.
Underestimating even a few smaller direct costs can meaningfully erode a project’s actual margin once totalled.
Account for your genuine time properly
Time spent on a project, including planning, communication and revisions, not just the visible production work, needs to be costed at a rate that genuinely reflects its value, not treated as free simply because it’s your own labour.
Our guide to the ultimate pricing guide for small businesses covers valuing your own time and expertise properly within a broader pricing approach.
Build in a genuine contingency
Projects rarely go exactly to plan, and building a reasonable contingency into the cost estimate for unexpected complications protects margin without needing to renegotiate the price mid-project when something inevitably shifts.
This contingency should be realistic based on genuine experience with similar projects, not either negligible or excessive.
Present the costing clearly to the client
A clear, itemised costing that the client can genuinely understand builds trust and reduces the likelihood of disputes later, compared to a single vague total that leaves the client uncertain what they’re actually paying for.
Consumer protection principles around fair, transparent pricing are set out by the Department of Trade, Industry and Competition, worth understanding alongside a proper itemised quote.
Frequently asked questions
What does a proper project costing need to include beyond materials?
Direct labour, your own time properly valued, a contingency for unexpected issues, and often-overlooked costs like transport.
Should an entrepreneur’s own time be costed as free?
No, it should be costed at a rate that genuinely reflects its value, not treated as free simply because it’s your own labour.
Why build a contingency into a project cost?
Because projects rarely go exactly to plan, and a contingency protects margin without needing to renegotiate mid-project.
How should a costing be presented to a client?
Clearly and itemised, so the client genuinely understands what they’re paying for, reducing the likelihood of later disputes.
What happens if smaller direct costs are underestimated?
They can meaningfully erode a project’s actual margin once totalled, even if each one seems minor individually.
Further reading
Originally published in 2024. Updated September 2026 into a clearer, more complete guide to costing a project properly.
