How do I know if a fixed-price project is profitable?

Divide the fee by every hour the project took, including calls, revisions and admin. That is the effective rate for that project. While the work is still running you cannot know the final hours, so compare hours logged so far against fee divided by your floor rate, which is the number of hours the fee can afford.

How many hours should a fixed-price project take?

At most fee divided by your floor rate. A fee of $4,800 with a floor of $85 covers 56 hours. Your estimate might have said 40, but 56 is the limit, and it is the number that decides whether the project still pays you.

What should I do when a fixed-price project runs over?

Decide at the halfway point, not at delivery. If half the hour budget is gone and the work is not half done, you can re-scope, raise a change order for the extra work, or finish it knowingly and price the next project from the hours this one really took.

Why fixed-price projects lose money: work out the hour budget first

A fixed price sets your fee, not your rate. Divide the fee by your floor rate to get the hours it can afford, then check at the halfway hour instead of at the invoice.

A fixed price sets your fee. It does not set your rate, because the other half of the division is the hours, and nobody signs those. Work out how many hours the fee can afford before you start, and a fixed-price project stops being a bet you settle at the invoice.

A fixed price only fixes one half

Say a project you scoped at 40 hours, quoted at $4,800. That is $120 an hour, comfortably above a floor rate of $85. It looks like good work, and on the day you send the quote it is.

What you agreed is the numerator. The denominator stays open for as long as the project runs, and every call, revision round and “quick change” moves it. That is why two freelancers can quote the same fee for the same job and end the year in different places.

Work out the hour budget: fee divided by your floor

There is a second division, and it goes the other way. Take the fee and divide it by your floor rate instead of by your hours:

$4,800 ÷ $85 = 56 hours.

That is the hour budget. It is how much of your time the fee can pay for before the project drops below the line you set. Hour 57 is the first hour that costs you something, and it appears in no version of the contract.

Notice that 56 has nothing to do with your 40-hour estimate. The estimate is a plan, and plans are optimistic. The budget is a limit, and it is arithmetic.

A $4,800 fee at a floor of $85 covers 56 hours. This project delivered at 63, and the amber tail is the part nobody paid for.

What the overrun actually cost

The project above closed at 63 hours. Divide the other way again and you get the effective rate: $4,800 ÷ 63 = $76 an hour, nine dollars under the floor.

Nine dollars sounds survivable. Put it back into hours and it is clearer: 63 hours at your own line were worth $5,355, and you were paid $4,800. The gap is $555, and it was not a discount you offered. It arrived one revision round at a time.

Do this across four projects a year and you have worked most of a month for nothing, which is the version of the arithmetic that tends to change behaviour.

Check at the halfway hour, not at the invoice

Hour 28 is halfway through a budget of 56. That is the checkpoint, and it is the only one that is still a decision.

The question at hour 28 is not “how am I doing on time”, it is narrower than that: is the work half done? If it is, the project is on budget and there is nothing to do. If it is not, the ending is already determined, and everything after that is a matter of how much you find out and when.

The reason to fix the checkpoint in hours rather than in days is that a calendar week tells you nothing about a project you touched twice. Hours are the only unit the budget is denominated in.

What to do when the budget is gone and the work is not

Three moves, and you have a specific number behind each one:

Re-scope. The cheapest fix, and often the honest one. Four revision rounds where the agreement said two is not a pricing problem, it is a scope problem, and it is fixed by naming the rounds rather than by absorbing them.

Raise a change order. If the client added work, the added work is billable. “The extra dashboard puts us about 12 hours past what the fee covers, so it is either a change order or the next phase” is a sentence you can send at hour 28. At hour 63 it is a complaint.

Finish and re-price. Sometimes you finish the thing at a loss because the relationship is worth it, or because you got the estimate wrong and that is on you. That is a legitimate choice as long as it is a choice. The condition is that the next quote for that kind of work starts from 63 hours, not from 40.

Price the next one from the hours it really took

The most valuable output of a fixed-price project is not the fee, it is the hour count. It only exists if you tracked the whole thing, including the parts that felt like they did not count.

Next time the same kind of project comes up, quote it as hours times your floor rather than as a round number that sounds sayable. If the answer is more than the client will pay, you have learned that at the quoting stage rather than at hour 57. The effective hourly rate calculator does that division for a single job, and the guide on choosing between fixed price and hourly covers when a fixed fee is the wrong shape for the work in the first place.

Where CronLoom comes in

Fixed-price projects in CronLoom carry the fee and, optionally, a budget in hours. As you track, the project card shows how much of that budget is gone, and the all-time effective rate for the project is fee divided by the hours logged so far. When that number drops under the floor you set, the project is marked as below it, while the work is still open rather than in a post-mortem.

That is the whole feature: the division you would do by hand at hour 28, done every time you stop a timer. If you want it running on your next fixed price, join the waiting list.

Try it on the project you have open right now

Take the fee, divide it by your floor, and write the answer somewhere you will see it. Then look at the hours logged so far. If more than half of the budget is gone, the next conversation with that client is about scope, and it is better today than at delivery.