How to price a scope change without losing the original margin

A change quote should identify what is new, what it costs and what happens to the schedule. Reusing the original hourly selling rate can miss additional materials, coordination or a second visit. Start with the changed deliverable, then calculate its incremental cost.

Separate the change from the original agreement

Record the requested output, acceptance conditions, extra visits or revisions, dependencies and any work being removed. Keep a version of the original scope. For a software project, “add a payment integration” is too broad: list supported payment flows, testing, deployment and support. For a trade job, distinguish replacement parts from extra access or repair work.

The calculation below assumes separately agreed additional work. It does not establish a contractual right to charge for correcting an error in the original work.

Work through the extra cost

Extra input	Calculation	Cost
Delivery labour	6 hours × 40	240
Materials or licences	Supplier quote	150
Coordination and other incremental cost	Stated allowance	30
Total	240 + 150 + 30	420

At a 25% margin on this cost base, the change price is 420 ÷ 0.75 = 560. The retained amount is 140. Reproduce it in the scope change calculator using 6 hours, 40 hourly cost, 150 materials, 30 other costs and 25% margin.

If the hourly cost already contains overhead, do not add that overhead again. If the change adds a second visit or postpones another job, identify those effects separately. Lost revenue from displaced work is not automatically an extra cash expense; assess the contribution that would actually have been earned.

Check the combined project

Suppose the original quote was 2,000 with included costs of 1,500. With the change, total revenue becomes 2,560 and cost 1,920. The combined margin stays at 25%. Absorbing the change without charging gives revenue of 2,000 and cost 1,920: only 4% remains.

Now suppose the extra work takes eight hours. Change cost rises to 500; at the agreed price of 560, the change itself retains 60, or 10.71%. That does not automatically justify another charge: compare the actual work with the approved scope and terms.

Make the quote usable

Write the deliverable, price, payment date, effect on completion and approval status alongside the calculation. Use the estimate generator to record the agreed additions. After delivery, enter the actual costs in the job costing worksheet. An unexplained variance is a reason to improve the next estimate, not simply raise every price.

Method and scope

All amounts above are hypothetical teaching figures in one currency, excluding tax unless stated otherwise. These are original scenarios, not market prices, benchmark targets or professional recommendations. The references support the underlying concepts, not the example assumptions. This AI-assisted explanation has not had independent professional review. Calculation methods and limitations.