Professional services
Law Practice Pricing Calculator
Prices legal work from cost upward, where the fee basis changes who carries the risk.
Result
Overhead and margin are taken as shares of the selling price, which is why the cost is divided rather than multiplied. Adding 15% to cost does not produce a 15% margin. Gross profit is what is left after the cost of doing the job. Overhead comes out of that: the building, the office wages, the vans, insurance, software and advertising. A healthy gross margin still loses money if overhead is larger.
Get a Free Business AuditHow the calculation works
Direct cost divided by one minus overhead and margin together, so the price carries both. The structural choice sits above the arithmetic: hourly billing puts the hours risk on the client, flat fees put it on the practice, and contingency puts both the hours and the outcome risk on the practice. The same matter priced three ways is three different businesses.
What moves the number
- Fee basis and therefore who carries the hours risk.
- Expected hours and the width of their range.
- Overhead rate and target margin.
- Whether the fee is reasonable under applicable conduct rules.
Where this one goes wrong
Flat fees are what clients want and they only work where scope is genuinely definable, which means a flat fee needs a written boundary stating what it covers and what triggers an additional fee. Without that boundary the practice absorbs every expansion, and the matters that expand are the ones that consume the margin from the rest. Fees must also be reasonable under the conduct rules your state has adopted, which is a constraint on the result regardless of what the cost arithmetic supports.
Before you quote
- Define flat fee scope in writing, including what triggers more.
- Price from expected hours with the range considered, not the best case.
- Confirm the fee is reasonable under your state's rules.
Where the rules come from
Questions
About this calculator
Should I offer flat fees?
Where scope is genuinely definable, yes, since clients prefer them and they can be more profitable. They need a written boundary stating what is covered and what triggers an additional fee, because without one the practice absorbs every expansion for free.
Who carries the risk under each fee basis?
Hourly puts the hours risk on the client, flat fee puts it on the practice, and contingency puts both the hours and the outcome risk on the practice. The same matter priced three ways is three different businesses with three different capital needs.
Is there a ceiling on what I can charge?
Fees must be reasonable under the conduct rules your state has adopted, which weigh factors including the work required, the results obtained and customary local charges. That constrains the top end independently of what a cost-plus calculation produces.
The formula
price = direct cost / (1 - overhead% - margin%)
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How to use this calculator
- Labour cost ($). Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($). Enter your own figure; the page starts at $120.
- Other direct costs ($). Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%). Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%). Enter your own figure; the page starts at 15%.
The result updates as you type, so you can try a figure, see what it does to price to quote, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Labour cost | $900 |
| Materials cost | $120 |
| Other direct costs | $0 |
| Overhead rate | 22% |
| Target net margin | 15% |
What comes out
| Result | Value |
|---|---|
| Price to quote main result | $1,619 |
| Direct cost | $1,020 |
| Overhead recovered | $356.19 |
| Net profit | $242.86 |
| Gross margin | 37.0% |
| Markup on direct cost | 58.7% |
Quote $1,619 to cover $1,020 of direct cost, recover $356.19 of overhead and leave $242.86 of net profit. That is a 58.7% markup on cost.
How sensitive the answer is
Holding everything else steady and changing only labour cost, this is what happens to price to quote. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Labour cost ($) | Price to quote |
|---|---|
| $450 | $904.76 |
| $675 | $1,262 |
| $900 example above | $1,619 |
| $1,350 | $2,333 |
| $1,800 | $3,048 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Labour cost ($)
- Burdened: wages plus tax, insurance and the vehicle, not the hourly wage.
- Materials cost ($)
- A money amount, starting at $120.
- Other direct costs ($)
- Permits, disposal, equipment hire, subcontractors.
- Overhead rate (%)
- Overhead as a share of revenue. Work it out from last year's accounts.
- Target net margin (%)
- A percentage, between 0 and 80, starting at 15%.
What the results tell you
| Result | What it is |
|---|---|
| Price to quote | The headline result. A money figure. |
| Direct cost | A money figure. |
| Overhead recovered | A money figure. |
| Net profit | A money figure. |
| Gross margin | A percentage. |
| Markup on direct cost | A percentage. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.