Move from capacity to a client-ready quote
| Decision | Question to answer | Evidence to keep | Next step |
|---|---|---|---|
| Capacity | How many delivery hours can be sold after unavailable and non-billable time? | Time budget and capacity assumptions | Build a billable-utilisation scenario |
| Recovery rate | What must each sellable hour recover? | Labour, overhead and business-goal assumptions | Calculate a sustainable rate |
| Scope | What work, revisions, dependencies and exclusions are included? | Task estimate and scope record | Choose the commercial model |
| Quote | What price, timing, payment and change process will be proposed? | Issued quote and approval record | Track estimate against actual delivery |
Keep cost, capacity, rate and quote separate
Recovery rate = annual recovery requirement ÷ annual billable hours
- Annual recovery requirement
- User-entered labour or owner-pay recovery, overhead and business goal (currency per year) — business records and labelled assumptions
- Annual billable hours
- Available delivery hours after unavailable and non-billable time (hours per year) — time budget and labelled assumptions
- Recovery rate
- Planning amount to recover per billable hour (currency per hour) — calculated scenario
State whether any labour, overhead or profit component is already included so it is not counted twice.
- Cost is the resource consumed by delivery; price is what the customer is asked to pay.
- Capacity is the time available for work; billable capacity is the portion that can realistically be sold.
- A rate is a recovery benchmark; a quote adds scope, quantity, uncertainty, timing and commercial terms.
- A buffer protects a stated uncertainty; it is not evidence that every job will consume the buffer.
Treat queue length and lead time as evidence checkpoints, not pricing signals
Align the operating record before testing a price or scope change
- Measure the backlog at one stated date using accepted work or orders, not unqualified enquiries. (not complete)
- Record the promised lead time and the delivery period represented by the backlog. (not complete)
- Reconcile available productive capacity for the same period after existing commitments and non-delivery work. (not complete)
- Enter any expedite labour, supplier, rescheduling or service-recovery cost explicitly in neutral currency units. (not complete)
- Define the customer-choice boundary: normal timeline, reduced scope, approved priority option or decline. (not complete)
- Stop if the case relies on a demand forecast, willingness-to-pay assumption, market benchmark or unverified service obligation. (not complete)
| Checkpoint | Measured record or user assumption | What it can support | What it cannot establish |
|---|---|---|---|
| Backlog | Accepted work and remaining delivery units at the review date | Whether current commitments consume the stated period | Future demand or willingness to pay |
| Promised lead time | Current dated promise for the scoped service | Whether a new request fits the normal timeline | A profitable premium |
| Productive capacity | Available delivery units after committed and non-delivery time | Whether work must move, shrink or wait | Customer acceptance |
| Expedite cost | Entered incremental cost for the named scope and period | A reproducible absorb, offset or price-test scenario | A universal surcharge |
| Customer choice | Normal timeline, reduced scope, priority option or decline | A controlled quote decision with a stop condition | Legal or contractual permission |
Worked scenario: from time budget to base quote
The figures below are user-labelled assumptions in generic currency units. They are not market rates or recommendations.
| Item | User assumption | Scenario result |
|---|---|---|
| Annual recovery requirement | 120,000 | 120,000 |
| Annual billable hours | 1,200 hours | 1,200 hours |
| Recovery rate | 120,000 ÷ 1,200 | 100 per hour |
| Base task estimate | 30 hours | 3,000 |
| Direct project costs | 500 | 500 |
| Visible uncertainty allowance | 10% of base task amount | 300 |
| Planning quote | 3,000 + 500 + 300 | 3,800 |
Choose the next decision, not another copy of the same calculation
| If you need to… | Use this decision owner | Boundary |
|---|---|---|
| Build sellable time from a time budget | Billable Utilisation Planner | It plans capacity; it does not select a customer price. |
| Set an hourly, day, project or retainer recovery scenario | Service Rate & Quote Planner | It tests entered costs and capacity; it does not predict demand. |
| Stress-test a scoped project | Project Quote Builder | It compares project scenarios; it is not a legal quote or contract. |
| Price subcontracted delivery after coordination and supplier risk | Subcontractor Markup Planner | It protects subcontractor delivery cost and tests a proposed client price; it does not price a broader scope change. |
| Compare estimate with actual delivery | Job Costing & Margin Planner | It investigates job economics; it does not replace accounting records. |
| Set the smallest project recovery floor | Minimum Project Fee Planner | It reconciles sales, onboarding, administration, delivery, direct cost and overhead; the floor is not a market price or an automatic rejection rule. |
| Compare proposal options for the same job | Proposal Option Profitability Planner | It compares aligned scope, cost, capacity and duration assumptions; no option is universally best and acceptance is not predicted. |
| Review legal-matter commercial economics | Legal Matter Profitability Planner | It models user-entered fee structure, professional time, support cost, write-offs and collection exposure; it supplies no legal-practice, fee, ethics, contract or enforceability guidance. |
| Review allied-health session economics | Allied Health Session Pricing Planner | It separates contact time, non-contact work, cancellations and capacity using business-entered values; it supplies no clinical, funding, labour, regulatory or recommended-fee guidance. |
Plan the next step
- Service Rate & Quote Planner
Set a viable rate and project quote
- Billable Utilisation Planner
Turn available time into realistic billable capacity
- Project Quote Builder
Turn scoped task rows and project costs into a transparent fixed quote
- Subcontractor Markup Planner
Price subcontracted delivery
- Job Costing & Margin Planner
Compare quoted and actual job economics and identify overruns
- Minimum Project Fee Planner
Set a minimum project fee
- Proposal Option Profitability Planner
Compare proposal option economics
- Legal Matter Profitability Planner
Test matter economics across fee structure, professional time, support cost and write-offs
- Allied Health Session Pricing Planner
Set a session price from clinical time, non-contact work, cancellations and capacity
Service pricing questions
- Is a calculated hourly rate the same as a quote?
- No. A rate is a recovery benchmark for a unit of time. A quote applies a commercial model to defined scope, quantity, uncertainty, timing and terms.
- Is there one billable-utilisation target every service business should use?
- No. Build a time budget from your work pattern, team, non-billable obligations and demand. Treat the result as an assumption to test against actual time.
- Does the recovery rate set the final market price?
- No. It provides a sustainability check under entered assumptions. Scope, customer value, alternatives, risk and demand still need judgement, and a lower price requires an explicit trade-off.
Calculation methods used in this guide
- Service Rate & Quote Planner methodology — Margin101: Recovery-rate, capacity and quote-scenario definitions.
- Billable Utilisation Planner methodology — Margin101: Available-time and billable-utilisation definitions.
- Project Quote Builder methodology — Margin101: Project scope, cost and duration scenario boundaries.
- Subcontractor Markup Planner methodology — Margin101: Coordination cost, percentage risk buffer, fixed risk allowance and target-margin boundaries.
- Minimum Project Fee methodology — Margin101: Project recovery-floor inputs and limitations.
- Proposal Option Profitability methodology — Margin101: Like-for-like proposal option comparison boundaries.
- Legal Matter Profitability methodology — Margin101: User-entered commercial economics and professional-practice limitations.
- Allied Health Session Pricing methodology — Margin101: User-entered session economics and clinical, funding and regulatory limitations.