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There are many service providers across industries working on a project-by-project basis with clients. Beyond strategizing project specifics, clients will always want an estimate of how much the project will cost before officially signing on to work with you.
A project estimate for a client is exactly that: an estimation of the costs associated with your work, including materials, time, and other resources. Keeping to a specified budget generally means clients remain happy and are likely to return if they need help in the future. It’s also worth noting that a good cost estimate can become repeatable—like a template or formula—and it will ensure you’re making a profit on your work.
Read on for the rundown on what a client project cost is, how it differs from a traditional budget, and a step-by-step guide to generating a project cost estimation of your own.
What is a project cost estimate?
A project cost estimate is what a business provides to potential clients to summarize what they’ll deliver on a project and the total cost of that work. Depending on your services, your cost estimate might be based on time spent working, package type, materials required, or other similar factors.
A project estimate needs to be a detailed document that includes details like:
Additional labor or vendors
Materials costs
Taxes or fees
Your project estimate is important because it will help set expectations with your client about what you’ll deliver, when, and how much it’ll cost. It can be a determining factor in whether you get hired, and an important resource for your client to build into their overall budget.
What’s the difference between a project cost estimate and budget?
The biggest difference between a project estimate and a budget is that one is fixed and the other isn’t. Budgets are fixed figures approved by everyone involved in the project agreement. Project cost estimates, on the other hand, are more flexible, and act as a forecasting exercise for your client. They can be adjusted up or down, and may not include when issues arise like out-of-scope project requests or an increase in pricing in materials.
For example, a wedding photographer might send an estimate to a client. Once the photographer and client have signed a contract with each other, they’re tied to a budget, which may only change under special circumstances, like last-minute additions to the shooting schedule.
Learn how to create professional estimate, contract, and proposal documents
What are the types of project cost estimates?
There are three different types of project estimates you can use with your clients to define the overall scope of the work ahead. They are: a ballpark estimate, a budget estimate, and a statement of work.
1. Ballpark estimate
This type of estimate is predicated on general assumption of costs. A good template for a ballpark estimate is to use a similar, past project to guide you. For example, a graphic designer probably has a sense of how much time or effort a website design project will take them, so they can apply that estimate to most of their website design requests as a starting point.
2. Budget estimate
A budget estimate, also called a parameter estimate, relies on data or information about the project itself to generate a more accurate read on the project and its costs. For example, an interior designer might be able to make a budget estimate based on the number of rooms, preferred style, and target price range for art and furnishings from their client.
3. Statement of work (SOW)
The SOW is the most detailed project cost estimate. This is what your client will base their budget on, and usually needs to be signed as part of a contract. SOWs list out what you’re expected to deliver, when, and the associated fees. SOWs may also include additional budget lines for emergencies or out-of-scope tasks that occur as the project goes on.
On Squarespace, you can create branded professional estimates, proposals, and contracts, plus send invoices and track project milestones in one place. Turn documents into repeatable templates, or use the AI writer to help you generate starting points for your documents.
How to calculate project cost: A step-by-step guide
Project cost estimates will be determined by the client, the project, and your particular business. However, these seven steps can get you started if you’ve never generated a project estimate for a client before.
1. Outline your team’s roles and responsibilities
Include information about who you are, what your business does, and who is on the team for a client’s project. Clients want to know how much they’re going to be spending, but it’s also useful to introduce yourself, how you work, and what your project management process is. This helps you build trust with the client beyond numbers, which can help you win their business.
2. Write a project summary
Sometimes clients will provide a detailed overview of their project and expectations, and other times they provide a general idea. It’s important for you to understand what you’ll need to deliver to satisfy the client. Write a project summary that includes the client’s needs, what success looks like, and how you’ll deliver on that success.
Include a breakdown of everything that will happen in the project timeline (such as first drafts, reviews and final deadlines), a list of deliverables, and any relevant process or project management information.
3. Do project discovery
Get as much information about the project as you can to include in the finalized estimate for a client. This can include looking back on past projects to understand your process and time management. If you’re working with corporate clients, it might mean gathering information on stakeholders and leaders who will ultimately sign off on the project’s completion, and what deliverables are needed, as well as expected launch times.
The more you know about the scope of the project itself, the better informed your project estimate will be.
4. Calculate your costs for tasks and labor
Not all projects will include more than one person. If you’re writing a cost estimate for yourself as a freelance illustrator, for example, your estimate will largely be an estimated pricing of your time and resources. However, if you’re running a small agency with two to three illustrators all working on the same project, you’ll need to include information about their availability and what it’ll cost to have all of them on the project.
This is flexible depending on what resources you need to complete the project, but it doesn’t have to be complicated. List out any materials you’d need to buy to complete your work, everyone working on the project, their associated tasks, and the rate of your team’s labor to give clients an idea of what to expect.
See our guide to setting your rates
5. Include potential additional fees
It’s important to build in some buffer or contingency money into your estimate. Once the estimate becomes a budget, it’s likely there will be no wiggle room if an emergency happens or something costs more than what was projected. Add a certain percentage (e.g. 10-25%) extra as a separate item in the project estimate so your client can build it into their budget knowing that, in a perfect world, they won’t have to use it.
Specify what might cause a budget to increase, like additional rounds of revisions, late requests, or other changes to the scope of your services.
6. Calculate total cost of the project
Once you’ve detailed what the project is, who is working on it, how much it’ll cost for labor and materials, and indicated a buffer amount for additional or hidden costs, then you can calculate the total cost of the project. Don’t forget to add any additional tax or payment fees that you may need to charge.
7. Generate project timeline
You can write this in the summary or give it its own section, but it’s imperative that your client knows after reading your project cost estimate what the timeline will be to complete the project. Give as much detail as you can about specific phases, who needs to sign off when to move onto the next phase, and the predicted final delivery date of the project.
Project cost estimate example
For this project cost estimate, let’s return to the illustrator example. A client asks a solo illustrator and designer to create 12 header images for their upcoming project, a blog series to be launched in the spring. The client will also need 12 images for the body copy, and six corresponding social media and paid ad images.
Project summary
Design and create original static visual assets for a blog series launching in spring 2025. Assets include 12 large banner and/or header images, 12 body copy images, and six social media assets inclusive of paid ads.
Total number of image assets required for project: 30
Cost
Designer fee: $75 per hour
Expected hours by asset type:
Header: 8 hours
Body copy: 5 hours
Social media/paid ad: 2 hours
Total hours for all assets: 180 hours
Cost for materials: N/A
TOTAL PROJECT COST: $13,500
Timeline
Project launch in spring 2025. Visual assets will be finalized one month prior to launch. Image assets for the blog project expected to be completed within 10 weeks, inclusive of time set aside for asset reviews and revision. Assets will be delivered weekly on a Friday with time for feedback. Details on feedback schedule discussed below.
Deliverables
Total images assets: 30
File type: PNG
Administrative details
Additional time is included into the project timeline to account for feedback and revisions. Feedback details include:
Maximum of two rounds of feedback. Image will be considered final after the second revision.
Images delivered weekly on a Friday with feedback required the following Tuesday to be implemented by Thursday.
Once assets have been signed off by stakeholders, designer will send final PNG files.
Out-of-scope requests: Due to the nature of this project, out-of-scope requests (including additional image assets) must be raised at least two weeks before an expected first draft. Out-of-scope requests will be decided on a case-by-case basis.
Best practices for creating your own project estimate
Your project cost estimate will become the foundation for any project a potential client brings to you. While it’s valuable to follow our step-by-step guide to get a solid estimate in front of your client, consider these tips and tricks to make the most out of your estimate and make it work for you.
Ask questions. Make sure you understand project goals, stakeholders, and other key details before putting together your estimate. Asking questions about the project shows your investment in the work and doing it in the best possible way.
Be detailed. Being detailed about the project, how to invoice, who to talk to and how, and anything else about the project shows your client that you’re serious about this work, and helps you both ensure that the project doesn’t go over budget.
Try not to assume anything. Assuming what you think a client wants to see or what they need isn’t going to work well long-term. It’s best to get concrete information on the project, needs, and deadlines to refine your estimate.
Consider incorporating formal change management. You can build a formal change management process into the final project proposal. This can help you manage late or out of scope requests by outlining days notice, budgeting, and other guidelines for unexpected project changes.