Will this fixed-price project make money?
A fixed-price bid means you carry the risk that cost and time overrun. Before you sign, quantify it: what margin can you really defend, and what is the probability you end up losing money?
If you quote 20,000 USD against an expected cost of about 15,667 USD, your chance of losing money is about 3.2% — but the margin you can actually defend at 80% confidence is only about 11.8%. To hold a 20.0% margin at 80% confidence you would need to bid about 22,038 USD.
Contract & cost estimate
Results
| Scenario | P50 | P80 | P90 |
|---|---|---|---|
| Estimated cost | 15,667 USD | 17,630 USD | 18,657 USD |
| Your margin if you quote 20,000 USD | 21.7% | 11.8% | 6.7% |
Reading the table: a P80 cost of 17,630 USD means in 80% of outcomes cost stays at or below that figure. If your margin goes negative at a percentile, that percentile of outcomes is a loss.
Formula
cost at P = mean + z·σ, where mean = (O + 4M + P)/6, σ = (P − O)/6
margin at P = (price − cost_P) / price
P(losing money) = 1 − Φ((price − mean) / σ)
minimum quote for target margin m at 80% = P80_cost / (1 − m)
Normal approximation: P50/P80/P90 and the loss probability use a normal approximation to a Beta-PERT cost estimate — a fast, honest single-estimate shortcut, not a full simulation.
Related tools
- What should I bid to keep my target margin?
- How likely are we to blow the budget?
- What must we quote just to break even?
- P50 vs P80 — what the numbers actually mean
A single three-point cost is only the start. For the real picture — many tasks, dependencies and risk events — run thousands of simulations in the full app, or see the methodology behind the numbers.