Free tool · Pricing
Wrap Rate Calculator
A wrap rate is the multiplier that turns direct hourly labor cost into a fully burdened billing rate. This calculates it from your own fringe, overhead, G&A and fee, and shows every layer as it compounds, so you can check the arithmetic instead of trusting it.
No sign-up, no email, nothing stored. If you want the definition rather than the number, the long form is at What is a wrap rate?
Your rates
The fields start on a worked example so you can see the shape of the answer before you type anything. Replace them with your own figures. Nothing is stored and nothing is sent anywhere.
What the hour costs you in salary or wages. Not what you bill, and not loaded with anything yet.
Payroll taxes, health insurance, paid leave and retirement, as a percentage of direct labor.
The cost of operating the unit that produces the work. Applied to labor that already carries fringe.
Company-level cost: executive, finance, contracts, business development, legal. Enter the rate as computed on the base you select below.
Applied last, after total cost. Fee is not the wrap rate; it is only the final layer of it.
Optional. Pass-through dollars on the program, divided by its direct labor hours. Leave at zero for a pure services effort. This is the field the allocation base actually bites on.
Your result
Fully burdened billable rate $123.55 per hour. Wrap rate 2.4710.
Fully burdened billable rate
$123.55per hour
Wrap rate
2.4710× direct labor
How the burdens stack, one layer at a time
| Layer | Rate | Adds | Running total |
|---|---|---|---|
| Direct laborThe starting figure | No rate applied | $50.00 | $50.00 |
| Fringeon direct labor | 30% | $15.00 | $65.00 |
| Overheadon labor that already carries fringe | 60% | $39.00 | $104.00 |
| G&Aon the total cost input | 10% | $10.40 | $114.40 |
| Fee or profitlast, on total cost | 8% | $9.15 | $123.55 |
Figures are rounded to the cent for display only. Every layer is carried at full precision through the calculation, so a row can appear to be a cent out against the running total beside it. $123.55 divided by $50.00 is 2.4710.
What your G&A base is doing
Total Cost Input, your selection
$242.35
Total price for one direct labor hour and the materials that go with it.
Value Added Base, the other base
$231.55
Same rates, same work, the pass-through dollars allocated differently.
The gap is $10.80 per direct labor hour, and it is entirely G&A charged on pass-through dollars plus the fee that rides on it.
Why the two differHide
You told us this program carries $100.00 of material and subcontract cost per direct labor hour, and that your G&A rate is computed on a Total Cost Input. So G&A is applied to $204.00 of cost per hour, not to the $104.00 of burdened labor alone. On a program with real material or subcontract content that difference is the whole competitiveness argument in the glossary entry.
Read the other way: to recover the same G&A dollars from the smaller base, a VAB rate would have to be about 19.62% where your TCI rate is 10%. That is the glossary’s point that a value added base produces a higher G&A rate on the labor that remains. This one line assumes the same G&A pool and the same total business volume; a real rate comes out of your own pool and base, not out of one program.
This is an estimate, not a determination. It is arithmetic on the five figures you typed, and it is written to be generally correct about how the layers stack. What it cannot know is your actual accounting treatment: which costs sit in which pool, whether your base is the one your disclosure statement describes, whether any of it would survive a DCAA look at your system, or what your approved provisional rates are. A rate is only as good as the accounting system that produced it. This is not accounting advice, not legal advice, and not a price you should put in a proposal without checking it against your own books.
None of this left your browser. This page has no form, sets no cookie, writes nothing to local storage and sends nothing anywhere, so the figures above disappear when you close the tab.
A wrap rate is an output of an accounting system, not of a web page. This page does arithmetic on the rates you give it. It cannot know which costs you have put in which pool, whether your allocation base matches what your disclosure statement says, whether any unallowable cost is sitting in an indirect pool where an auditor will find it, or what your approved provisional rates are. Build the structure from an accounting system that separates direct from indirect and allowable from unallowable, and treat the number here as a check on that work rather than a substitute for it.
The method, written out
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Nothing below is hidden behind the calculator. This is the whole arithmetic, in the order it runs, so you can reproduce it on paper or in a spreadsheet and see whether we agree.
The four layers, and what each one loads
The burdens compound. They do not simply add together, and the order of the layers matters, because each layer multiplies the layer before it. A small change in a lower-tier rate therefore moves the final number more than most people expect.
- Fringe applies to direct labor. It covers payroll taxes, health insurance, paid leave and retirement contributions.
- Overhead applies to labor that already carries fringe. It covers the cost to operate the unit that produces the work: supervision, facilities, tools and indirect engineering support.
- G&A, general and administrative, applies to the total cost input. It covers company-level cost: executive, finance, contracts, business development and legal.
- Fee or profit applies last, after total cost. Fee is not the wrap rate. It is only the last layer of it.
The formula
Percentages below are decimals, so 30 percent is 0.30.
Billable rate = Direct labor rate
x (1 + Fringe)
x (1 + Overhead)
x (1 + G&A)
x (1 + Fee)
Wrap rate = Billable rate / Direct labor rate
= (1 + Fringe) x (1 + Overhead) x (1 + G&A) x (1 + Fee)The wrap rate is the multiplier alone, which is why it does not depend on the direct labor rate you put in. Two people at different salaries in the same company, on the same contract, carry the same wrap rate and produce different billable rates.
Total Cost Input compared to Value Added Base
A contractor must apply G&A to a base, and the choice of base is a real accounting decision. Total Cost Input applies G&A to all costs, including materials and subcontracts. Value Added Base excludes materials and subcontracts from the G&A base.
On a material-heavy or subcontract-heavy program, Total Cost Input puts a large G&A charge on pass-through dollars. That charge can make your price uncompetitive and can attract scrutiny. A Value Added base avoids that result. It also produces a higher G&A rate on the labor that remains, because the same pool is spread over a smaller base. You must apply your chosen base consistently, and you must be able to defend it. You cannot select the favorable base contract by contract.
The base does not change the labor multiplier. Direct labor sits inside both bases, so labor picks up G&A either way. What the base changes is what happens to the material and subcontract dollars beside it:
Let Burdened labor = Direct labor x (1 + Fringe) x (1 + Overhead)
Materials = material + subcontract cost, per direct labor hour
Total Cost Input
Price = [ Burdened labor + Materials ] x (1 + G&A) x (1 + Fee)
Value Added Base
Price = [ Burdened labor x (1 + G&A) + Materials ] x (1 + Fee)Fee is shown applying to total cost, which is what the layering rule says. In practice fee on pass-through dollars is frequently negotiated down or to zero. That is a negotiating fact rather than a rate-structure fact, so it is not built into the arithmetic here. Related reading: excessive pass-through charges.
A worked example, end to end
These are the figures the calculator above starts on. They are illustrative and were chosen because the arithmetic stays clean enough to follow without a calculator. They are not recommended rates, and no rate on this page came from a survey.
The inputs
- Direct labor rate $50.00 per hour
- Fringe 30%
- Overhead 60%
- G&A 10%, computed on a Total Cost Input
- Fee 8%
- Material and subcontract cost $100.00 per direct labor hour
Layer by layer
Direct labor $50.00 + Fringe 30% x $50.00 = $15.00 $65.00 + Overhead 60% x $65.00 = $39.00 $104.00 + G&A 10% x $104.00 = $10.40 $114.40 + Fee 8% x $114.40 = $9.15 $123.55 Billable rate $123.55 per hour Wrap rate $123.55 / $50.00 = 2.4710 Check the multiplier directly: 1.30 x 1.60 x 1.10 x 1.08 = 2.4710
Adding the four percentages instead of compounding them gives 2.0800, which is $104.00 an hour rather than $123.55. That gap is the whole reason the order of the layers matters.
What the base does to this program
Burdened labor (fringe + overhead, before G&A) $104.00 Material and subcontract cost per hour $100.00 Total Cost Input G&A base $104.00 + $100.00 = $204.00 G&A 10% x $204.00 = $20.40 Total cost $224.40 Price x (1 + 8%) = $242.35 Value Added Base G&A base $104.00 G&A 10% x $104.00 = $10.40 Total cost $214.40 Price x (1 + 8%) = $231.55 Difference $10.80 per direct labor hour
The billable labor rate is $123.55 under both bases. Only the pass-through dollars move. On a program with $100.00 of material per direct labor hour the gap is $10.80 an hour, and it scales with the material content, which is why the base choice is a competitiveness question on a subcontract-heavy pursuit and almost nothing on a pure services one.
The other direction is the part people miss. To recover the same G&A dollars from the smaller base, the Value Added rate here would have to be about 19.62% where the Total Cost Input rate is 10%. A company that moves base and keeps quoting its old G&A rate is under-recovering. That comparison assumes the same pool and the same total business volume; a real rate comes out of your own pool and base, not out of one program.
What this page will not do
- It will not accept a negative rate. A credit, a rate adjustment or a prior-year true-up belongs inside the pool or the base that produced the rate, never as a negative layer on top of it.
- It will not tell you whether a cost is allowable. FAR Part 31 governs that, and a contractor cannot put an unallowable cost in an indirect pool. FAR 31.201-6 goes further and requires each unallowable cost to be identified, removed from any billing, claim or proposal, and allocated its share of indirect burden.
- It will not model more than one overhead pool. Different sites, different contract types, and on-site or off-site work often justify different pools. One blended company-wide number is simple and frequently indefensible.
- It will not true up your provisional rates against actuals, which is the step that decides whether you absorbed the difference or lost work you could have won.
Common questions
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What is a good wrap rate?
There is no single answer, and a lower wrap rate is not automatically better. A low multiplier can indicate thin infrastructure, an unusual allocation base, or cost deferred to somewhere it will resurface later. What matters is the resulting price and whether the rate structure survives review. Two companies with the same wrap rate can have very different indirect structures, and only one of them may be able to defend it.
Do the burdens add together or multiply?
They multiply. Fringe applies to direct labor, overhead applies to labor that already carries fringe, G&A applies to the total cost input, and fee applies last after total cost. Adding the percentages together understates the answer, and it understates it more the higher the rates are. At 30 percent fringe, 60 percent overhead, 10 percent G&A and 8 percent fee, adding gives 2.0800 and compounding gives 2.4710.
Does the G&A allocation base change my labor wrap rate?
Not at a given G&A rate. Direct labor sits inside both a Total Cost Input base and a Value Added base, so labor picks up G&A either way. What the base changes is whether your material and subcontract dollars pick up a G&A charge, which moves the price on a material-heavy or subcontract-heavy program, and the G&A rate itself, because the same pool spread over a smaller base produces a larger rate.
Should I use Total Cost Input or a Value Added Base?
That is an accounting decision to make deliberately and record, not one to pick per proposal. Total Cost Input puts a G&A charge on pass-through dollars, which can make a subcontract-heavy price uncompetitive and can attract scrutiny. A Value Added base avoids that but produces a higher G&A rate on the labor that remains. You must apply your chosen base consistently and you must be able to defend it. You cannot select the favorable base contract by contract.
Is a wrap rate the same as a profit margin?
No. Fee or profit is only the last layer of the rate. Most of a wrap rate is indirect cost the company has already incurred: payroll taxes and benefits, the cost of running the unit that does the work, and company-level expense such as finance, contracts and legal.
Does this page store or send my rates?
No. There is no form, no cookie, no local storage and no network request on this page. Everything is calculated in your own browser and disappears when you close the tab. Your indirect rates are close to your cost structure, which is exactly the kind of figure that should not be typed into a lead-capture form to get a number back.
The long form
A calculator compresses. These do not.
- What is a wrap rate?The definition, what goes wrong with wrap rates in practice, and how FAR Part 31 applies.
- What are excessive pass-through charges?Why a G&A charge on subcontract dollars attracts attention.
- What is a Basis of Estimate?A wrap rate times hours is a price. It does not explain where the hours came from.
- The other free toolsNo sign-up on any of them.
Most small contractors get their first wrap rate from somewhere else, and nobody traces it back to a pool and a base until an audit asks.