Enter the total cost and the cost of labor into the calculator to determine the Wrap rate.

## Wrap Rate Formula

The following formula is used to calculate a wrap rate.

WR = TC/hr / LC/hr

• Where WR is the wrap rate
• TC/hr is the total cost of the project per hour (\$/hr)
• LC/hr is the cost of labor per hour needed for the project (\$/hr)

Since the units of TC/hr and LC/hr are the same, the result of the wrap rate is a unitless quantity.

## Wrap Rate Defintion

What is a wrap rate?

A wrap rate is a multiple that when multiplying by the hourly labor rate yields a loaded labor rate. The loaded labor rate is the rate someone would charge a customer for work, and the base labor rate is the exact cost or rate of the labor needed to do the job.

In other words, the multiple measures how much above the base labor rate a company is charging for its service or contract.

## Example Problem

How to calculate wrap rate?

1. First, determine the base cost of labor for the contract.

For this example, a company will hire an independent worker at \$15.50/hr.

2. Next, determine the total cost charged to the end customer.

For this example, the company that hired the independent worker is going to charge the end-user a total of \$30.00/hr.

3. Finally, calculate the wrap rate using the formula above.

The wrap rate is calculated to be:
WR = TC/hr / LC/hr
WR = 30.00 / 15.50
WR = 1.935