Wrap Rate Calculator
The Wrap Rate is a crucial metric in project management and consulting, representing the total cost of employing a resource, including direct and indirect costs. It's essential for accurate bidding, profitability analysis, and client billing.
Calculate Wrap Rate
Understanding Wrap Rate
The Wrap Rate is calculated by summing up all direct and indirect costs associated with an employee or resource, and then dividing that sum by the direct labor cost. This gives you a multiplier that represents the total cost burden for every dollar spent on direct labor.
Formula for Wrap Rate:
Wrap Rate = (Direct Labor Cost + Benefits Cost + Overhead Cost) / Direct Labor Cost
A higher wrap rate indicates that a larger portion of the total cost is due to indirect expenses and benefits. It's important for understanding the true cost of your resources.
The Billing Rate is then derived from the wrap rate and the desired profit margin. This ensures that your pricing covers all costs and generates the intended profit.
Formula for Billing Rate:
Billing Rate = Wrap Rate * (1 + Desired Profit Margin / 100) * Direct Labor Cost
This calculator helps you quickly determine both your resource's wrap rate and the appropriate billing rate to ensure profitability.
function calculateWrapRate() {
var directLaborCost = parseFloat(document.getElementById("directLaborCost").value);
var benefitsCost = parseFloat(document.getElementById("benefitsCost").value);
var overheadCost = parseFloat(document.getElementById("overheadCost").value);
var profitMargin = parseFloat(document.getElementById("profitMargin").value);
var wrapRateResultElement = document.getElementById("wrapRateResult");
var billingRateResultElement = document.getElementById("billingRateResult");
wrapRateResultElement.innerHTML = "";
billingRateResultElement.innerHTML = "";
if (isNaN(directLaborCost) || isNaN(benefitsCost) || isNaN(overheadCost) || isNaN(profitMargin)) {
wrapRateResultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (directLaborCost <= 0) {
wrapRateResultElement.innerHTML = "Direct Labor Cost must be greater than zero.";
return;
}
// Calculate Wrap Rate
var totalCost = directLaborCost + benefitsCost + overheadCost;
var wrapRate = totalCost / directLaborCost;
// Calculate Billing Rate
var billingRate = wrapRate * (1 + profitMargin / 100) * directLaborCost;
wrapRateResultElement.innerHTML = "
Wrap Rate: " + wrapRate.toFixed(2) + "";
billingRateResultElement.innerHTML = "
Required Billing Rate (per period): $" + billingRate.toFixed(2) + "";
}
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