# Formulas Reference

All pricing calculations used in Tillage quotes and invoices.

## Line Item Calculations

### Base Cost

The fundamental cost before any adjustments.

```
Base Cost = Quantity × Unit Price
```

**Example:**
- Quantity: 10 hours
- Unit Price: $150/hour
- Base Cost: 10 × $150 = **$1,500**

### With Variance

Base cost adjusted for risk/uncertainty.

```
With Variance = Base Cost × (1 + Variance%)
```

**Example:**
- Base Cost: $1,500
- Variance: 20%
- With Variance: $1,500 × 1.20 = **$1,800**

### Line Total (Final)

After applying profit margin.

```
Line Total = With Variance × (1 + Profit Margin%)
```

**Example:**
- With Variance: $1,800
- Profit Margin: 15%
- Line Total: $1,800 × 1.15 = **$2,070**

### Complete Formula

```
Line Total = Quantity × Unit Price × (1 + Variance%) × (1 + Profit Margin%)
```

**Full Example:**
- Quantity: 10 hours
- Unit Price: $150
- Variance: 20%
- Profit Margin: 15%

```
Line Total = 10 × $150 × 1.20 × 1.15 = $2,070
```

## Quote Calculations

### Subtotal

Sum of all line item totals.

```
Subtotal = Σ (Line Total for each item)
```

**Example:**
- Line Item 1: $2,070
- Line Item 2: $3,450
- Line Item 3: $1,380
- Subtotal: **$6,900**

### Discount Amount

#### Percentage Discount

```
Discount = Subtotal × (Discount Percentage / 100)
```

**Example:**
- Subtotal: $6,900
- Discount: 10%
- Discount Amount: $6,900 × 0.10 = **$690**

#### Fixed Discount

```
Discount = Fixed Amount (capped at Subtotal)
```

**Example:**
- Subtotal: $6,900
- Fixed Discount: $500
- Discount Amount: **$500**

### Quote Total

```
Quote Total = Subtotal - Discount
```

**Example:**
- Subtotal: $6,900
- Discount: $690
- Quote Total: $6,900 - $690 = **$6,210**

### With Tax (if applicable)

```
Tax Amount = (Subtotal - Discount) × Tax Rate
Total with Tax = (Subtotal - Discount) + Tax Amount
```

**Example:**
- Pre-tax Total: $6,210
- Tax Rate: 8%
- Tax: $6,210 × 0.08 = $496.80
- Final Total: $6,210 + $496.80 = **$6,706.80**

## Payment Processing Fees

### Credit Card (Stripe)

```
Card Fee = (Payment Amount × 0.029) + $0.30
```

**Example:**
- Payment: $5,000
- Fee: ($5,000 × 0.029) + $0.30 = **$145.30**

### ACH Bank Transfer (Stripe)

```
ACH Fee = min(Payment Amount × 0.008, $5.00)
```

**Example:**
- Payment: $5,000
- Fee: min($5,000 × 0.008, $5) = min($40, $5) = **$5.00**

- Payment: $500
- Fee: min($500 × 0.008, $5) = min($4, $5) = **$4.00**

### Platform Fee (Free Plan)

```
Platform Fee = Payment Amount × 0.01
```

**Example:**
- Payment: $5,000
- Platform Fee: $5,000 × 0.01 = **$50**

### Net Amount Received

#### Free Plan (Card)

```
Net = Payment - Card Fee - Platform Fee
```

**Example:**
- Payment: $5,000
- Card Fee: $145.30
- Platform Fee: $50
- Net: $5,000 - $145.30 - $50 = **$4,804.70**

#### Free Plan (ACH)

```
Net = Payment - ACH Fee - Platform Fee
```

**Example:**
- Payment: $5,000
- ACH Fee: $5
- Platform Fee: $50
- Net: $5,000 - $5 - $50 = **$4,945.00**

#### Premium Plan (Card)

```
Net = Payment - Card Fee
```

**Example:**
- Payment: $5,000
- Card Fee: $145.30
- Net: $5,000 - $145.30 = **$4,854.70**

#### Premium Plan (ACH)

```
Net = Payment - ACH Fee
```

**Example:**
- Payment: $5,000
- ACH Fee: $5
- Net: $5,000 - $5 = **$4,995.00**

## Convenience Fees

### Percentage-Based

```
Convenience Fee = Invoice Amount × Fee Rate
Client Pays = Invoice Amount + Convenience Fee
```

**Example:**
- Invoice: $5,000
- Fee Rate: 3%
- Convenience Fee: $5,000 × 0.03 = $150
- Client Pays: **$5,150**

### Fixed Amount

```
Convenience Fee = Fixed Fee Amount
Client Pays = Invoice Amount + Convenience Fee
```

**Example:**
- Invoice: $5,000
- Fixed Fee: $10
- Client Pays: **$5,010**

## Payment Schedule Calculations

### Percentage-Based Milestones

```
Milestone Amount = Quote Total × Milestone Percentage
```

**Example:**
- Quote Total: $10,000
- Deposit (50%): $10,000 × 0.50 = **$5,000**
- Final (50%): $10,000 × 0.50 = **$5,000**

### Equal Installments

```
Installment Amount = Quote Total / Number of Installments
```

**Example:**
- Quote Total: $12,000
- Installments: 4
- Each Payment: $12,000 / 4 = **$3,000**

## Breakeven Calculations

### Premium vs Free Breakeven

```
Breakeven Volume = Premium Price / Platform Fee Rate
```

**Example:**
- Premium: $49/month
- Platform Fee: 1%
- Breakeven: $49 / 0.01 = **$4,900/month**

### Premium Savings Above Breakeven

```
Monthly Savings = (Monthly Volume × 0.01) - $49
```

**Example:**
- Monthly Volume: $10,000
- Free Plan Fee: $10,000 × 0.01 = $100
- Premium Cost: $49
- Savings: $100 - $49 = **$51/month**

## Variance Recommendations

| Risk Level | Variance Range | Use Case |
|------------|---------------|----------|
| Low | 5-10% | Repeat projects, clear scope |
| Standard | 10-15% | Typical projects |
| Moderate | 15-20% | New clients, some unknowns |
| High | 20-30% | Complex requirements |
| Very High | 30-50% | Experimental, unclear scope |

## Quick Reference Table

| Calculation | Formula |
|-------------|---------|
| Base Cost | Qty × Price |
| With Variance | Base × (1 + Var%) |
| Line Total | WithVar × (1 + Margin%) |
| Quote Total | Σ Lines - Discount |
| Card Fee | Amount × 2.9% + $0.30 |
| ACH Fee | min(Amount × 0.8%, $5) |
| Platform Fee | Amount × 1% (Free only) |

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*Related: [Profitability Features](/llms/features/profitability.txt) | [Variance Buffers Guide](/llms/guides/variance-buffers.txt) | [Glossary](/llms/reference/glossary.txt)*