How to Calculate Wrap Rate Percentage

Wrap Rate Calculator

Base Hourly Labor Rate ($)

Fringe Benefits (%)

Overhead Rate (%)

General & Admin (G&A) (%)

Desired Profit/Fee (%)

Calculation Summary

Total Billable Rate: $0.00

Wrap Rate Multiplier: 0.00

Wrap Rate Percentage: 0%

Understanding the Wrap Rate in Government Contracting

A wrap rate is a crucial financial metric used primarily by government contractors and professional service firms to determine the total cost of an employee beyond their base salary. It encompasses all indirect costs and profit margins to arrive at a final billable hourly rate.

The Components of a Wrap Rate

Base Labor: The actual hourly wage paid to the employee.
Fringe Benefits: Costs like health insurance, 401(k) contributions, paid time off (PTO), and payroll taxes.
Overhead: Costs directly related to supporting the project or workforce, such as specialized software, office space for specific teams, or project management.
General & Administrative (G&A): The "back office" costs of running the business, including executive salaries, accounting, legal, and marketing.
Profit/Fee: The margin the company intends to earn on top of all costs.

To calculate the wrap rate manually, follow this step-by-step formula:

Wrap Rate Multiplier = Billable Rate / Base Labor Rate
Wrap Rate % = (Wrap Rate Multiplier – 1) × 100

Example Calculation

Suppose you have a senior engineer with a base rate of $60.00/hr. Your company has the following rates:

Fringe: 35% ($21.00)
Overhead: 15% ($9.00)
G&A: 10% ($6.00)

Your total cost before profit is $96.00/hr. If you apply a 10% profit fee ($9.60), your final Billable Rate is $105.60.

The Wrap Rate Multiplier would be $105.60 / $60.00 = 1.76. This means your wrap rate percentage is 76%.

function calculateWrapRate() { var base = parseFloat(document.getElementById('baseLabor').value); var fringe = parseFloat(document.getElementById('fringeRate').value); var overhead = parseFloat(document.getElementById('overheadRate').value); var ga = parseFloat(document.getElementById('gaRate').value); var profit = parseFloat(document.getElementById('profitRate').value); if (isNaN(base) || base <= 0) { alert("Please enter a valid Base Labor Rate."); return; } // Calculate dollar amounts based on percentages of base labor var fringeAmt = base * (fringe / 100); var overheadAmt = base * (overhead / 100); var gaAmt = base * (ga / 100); // Total Internal Cost var totalCost = base + fringeAmt + overheadAmt + gaAmt; // Billable Rate (Cost + Profit Margin) // Note: In contracting, profit is often applied to the total burdened cost var billableRate = totalCost * (1 + (profit / 100)); // Wrap Multiplier var multiplier = billableRate / base; // Wrap Percentage var wrapPercentage = (multiplier – 1) * 100; // Display results document.getElementById('billableRateResult').innerText = "$" + billableRate.toFixed(2); document.getElementById('multiplierResult').innerText = multiplier.toFixed(3); document.getElementById('percentageResult').innerText = wrapPercentage.toFixed(2) + "%"; document.getElementById('results-display').style.display = 'block'; }