Variance Buffers

Variance buffers are Tillage's signature feature for protecting against project risk.

What Are Variance Buffers?

A variance buffer is a risk percentage added to each line item in your quote. It accounts for:

Scope creep and change requests
Unexpected complications
Client revision rounds
Estimation uncertainty
External dependencies

How Variance Works

When you set a variance buffer, it increases the line item total:

Example:

Base cost: 10 hours × $150/hour = $1,500
Variance buffer: 20%
Line total: $1,500 × 1.20 = $1,800

The extra $300 protects you if the work takes longer than estimated.

Variance Display Options

You control how variance appears to clients:

Hidden - Client sees only the final price
Blended - Variance is factored into the unit price
Visible - Client sees the breakdown (rare, for transparency)

Most agencies hide or blend variance to present clean pricing.

Recommended Variance Levels

Scenario	Suggested Variance
Repeat projects with clear scope	5-10%
Well-defined projects, familiar clients	10-15%
Standard projects, new clients	15-20%
Complex projects, unclear requirements	20-30%
High-risk or experimental work	30-50%
Projects with external dependencies	25-35%

AI-Suggested Variance

When using AI quote generation, Tillage suggests appropriate variance based on:

Line item complexity
Project type and industry
Keywords indicating risk (e.g., "integration," "custom," "migration")

Global Profit Margin

The global profit margin ensures a minimum profitability across your entire quote.

How It Works

After variance is applied to each line item, the global profit margin adds an additional percentage to the total:

Example:

Line item with variance: $1,800
Global profit margin: 15%
Final line total: $1,800 × 1.15 = $2,070

When to Use Profit Margin

Agency markup - Add your agency's standard margin on top of costs
Team profit sharing - Build in profit for bonuses or reinvestment
Rate standardization - Apply consistent margins across all projects
Subcontractor markup - When reselling subcontractor work

Typical Profit Margins

Freelancers: 10-15% (simpler cost structure)
Small agencies: 15-25%
Mid-size agencies: 20-35%
Large agencies: 25-40%

Complete Pricing Formula

For each line item in Tillage:

Base Cost = Quantity × Unit Price
With Variance = Base Cost × (1 + Variance%)
Final Total = With Variance × (1 + Profit Margin%)

Full Example:

Quantity: 20 hours
Unit Price: $125/hour
Variance: 20%
Profit Margin: 15%

Base Cost = 20 × $125 = $2,500
With Variance = $2,500 × 1.20 = $3,000
Final Total = $3,000 × 1.15 = $3,450

Your client sees $3,450. You're protected against risk and guaranteed profit.

Discount Management

Apply discounts after variance and profit are calculated:

Discount Types

Percentage discount - Take a percentage off the total (e.g., 10% off)
Fixed discount - Subtract a specific amount (e.g., $500 off)

Discount Strategy

Since discounts apply after profitability calculations, you can offer discounts while maintaining your margins:

Build in your standard variance and margin
Offer a "discount" that brings the price to your target
Client feels they're getting a deal
You maintain profitability

Locked Pricing

Once a quote is approved, prices are locked:

Invoice prices match the approved quote exactly
No recalculation when creating invoices
Protects both you and your client
Ensures quote accuracy and trust

Real-Time Calculations

As you build your quote, Tillage shows:

Base subtotal - Raw cost before adjustments
With variance - Cost including risk buffer
With margin - Full price including profit
Discount - Any reductions applied
Final total - What the client pays

This transparency helps you understand your profitability at a glance.

Settings Defaults

Configure your defaults in Settings:

Default variance - Applied to new line items (e.g., 15%)
Default profit margin - Starting margin for new quotes (e.g., 20%)
Default unit price - Your standard hourly rate

These defaults speed up quote creation while maintaining consistency.

Profitability Reports

Premium users can track profitability across:

Individual quotes and projects
Clients over time
Service categories
Team members

This data helps you refine your pricing strategy.

Best Practices

Always include variance - Even well-scoped projects have unknowns
Adjust per line item - High-risk items get higher variance
Review before sending - Check that margins meet your minimums
Track actuals - Compare estimated vs actual hours to refine future quotes
Be consistent - Use similar variance for similar project types

Related: AI Quoting | Variance Buffers Guide | Formulas Reference