Why Agencies Undercharge (And How to Fix It)

If you run an agency, you've probably had this nagging feeling: "Did I charge enough for that project?"

You're not alone. Most agencies undercharge by 15-25% on average, slowly eroding their profit margins project by project.

The Hidden Costs You're Forgetting

When creating a quote, it's easy to focus on the obvious costs: designer hours, developer time, project management. But what about:

• Scope creep buffer: That "small change" that turns into 10 hours of work
• Client revision rounds: Beyond the included revisions in your initial estimate
• Internal communication overhead: Team coordination, status updates, meetings
• Project risk: Unforeseen technical challenges or timeline delays
• Administrative time: Invoicing, follow-ups, contract management

These hidden costs add up to 20-30% of a project's total effort. If you're not building them into your quotes, you're working for free.

The Profitability Formula

Here's what smart agencies do:

Base Cost = Estimated Hours × Hourly Rate
With Variance = Base Cost × (1 + Risk Buffer %)
Final Price = With Variance × (1 + Target Profit Margin %)

Example:

• Base Cost: 100 hours × $100/hr = $10,000
• With 15% Variance: $10,000 × 1.15 = $11,500
• With 20% Margin: $11,500 × 1.20 = $13,800

That's a $3,800 difference between your gut feeling and a profitable quote.

How Tillage Solves This

Tillage builds profitability into every quote automatically:

1. Variance Buffers: Add risk percentage to each line item
2. Global Profit Margins: Set target profit distributed across all items
3. Real-Time Calculations: See impact as you adjust values
4. Visual Indicators: Clear display of base cost vs. final price

No spreadsheet formulas. No manual calculations. Just profitable quotes, every time.

Start Charging What You're Worth

The difference between guessing and calculating is thousands of dollars per project. Over a year, that's enough to hire another team member or take a proper vacation.

Stop leaving money on the table. Start using tools that help you quote smarter.

Start Free Forever →