function calculateWrapRateResults() {
// 1. Get Input Values
var directLaborStr = document.getElementById("directLaborRate").value;
var indirectPctStr = document.getElementById("indirectPoolPct").value;
var profitPctStr = document.getElementById("profitMarkupPct").value;
// 2. Validate Inputs (ensure they are numbers)
if (directLaborStr === "" || isNaN(directLaborStr) ||
indirectPctStr === "" || isNaN(indirectPctStr) ||
profitPctStr === "" || isNaN(profitPctStr)) {
alert("Please enter valid numerical values for all fields.");
return;
}
var directLabor = parseFloat(directLaborStr);
var indirectPct = parseFloat(indirectPctStr);
var profitPct = parseFloat(profitPctStr);
// Basic validation for non-negative numbers
if (directLabor < 0 || indirectPct < 0 || profitPct 0) {
wrapRateMultiplier = finalBillableRate / directLabor;
} else {
// Handle division by zero if labor is 0, though unlikely for this use case
wrapRateMultiplier = 0;
}
// 4. Display Results
document.getElementById("totalHourlyRateResult").innerHTML = "$" + finalBillableRate.toFixed(2);
// Fix multiplier to 2 decimal places (e.g., 2.54x)
document.getElementById("wrapRateMultiplierResult").innerHTML = wrapRateMultiplier.toFixed(2) + "x";
// Show results container
document.getElementById("wrapResultContainer").style.display = "block";
}
Understanding Your Wrap Rate
For service-based businesses, particularly government contractors, consultants, and engineering firms, understanding your "wrap rate" is crucial for profitability. It is the multiplier that turns your employee's raw hourly salary into a final billing rate for the client.
The wrap rate accounts for all the costs associated with employing someone beyond just their paycheck. If you only bill clients for the direct labor cost, your business will quickly operate at a loss due to uncovered expenses.
What goes into a Wrap Rate?
A comprehensive wrap rate calculation builds upon the Direct Labor rate by adding three main pools of indirect costs, plus profit:
Fringe Benefits: Costs related to the employee, such as employer-paid payroll taxes (FICA, FUTA, SUTA), health insurance contributions, retirement plan matching, and paid time off (vacation, sick leave).
Overhead: Operating costs related to supporting the direct labor workforce, such as facility costs for client sites, project management software, or dedicated equipment.
General & Administrative (G&A): Corporate expenses that cannot be tied to specific projects, such as executive salaries, accounting, legal fees, human resources, and corporate office rent.
Profit/Fee: The margin added on top of total costs to ensure business viability and growth.
How to Interpret the Multiplier
The result of the calculation is often expressed as a multiplier, such as "2.45x". This means for every $1.00 you pay an employee in direct salary, you must bill the client $2.45 to cover all indirect costs and achieve your target profit.
Example:
You pay a senior consultant $60.00 per hour (Direct Labor). Your combined Fringe, Overhead, and G&A pools total 110% of direct labor. You aim for a 12% profit markup on total costs.
Direct Labor: $60.00
Indirect Costs (110% of $60): $66.00
Total Cost: $126.00
Profit (12% of $126): $15.12
Final Billing Rate: $141.12
The Wrap Rate Multiplier is $141.12 / $60.00 = 2.35x.
Use the free wrap rate calculator above to quickly estimate your necessary billing rates based on your specific indirect cost structure and profit goals.