Calculate wrap rate, total hourly bill rate, or base labor rate, and build price wraps from fringe, overhead, G&A, and profit percentages.

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 hourly bill rate charged to the customer ($/hr)
  • LC/hr is the cost of labor per hour needed for the project ($/hr)

Choose Wrap multiple and divide the total hourly bill rate by the base hourly labor rate. Choose Total hourly bill rate or Base hourly labor rate for the inverse calculation.

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

Wrap Rate Definition

What is a wrap rate?

A wrap rate is a multiple that when multiplied by the hourly labor rate yields a loaded labor rate. A cost-loaded rate includes the specified indirect costs, while a price-loaded bill rate also includes profit. The base labor rate is the direct labor amount per hour. In Build a loaded bill rate, the retained sequential bases apply fringe to labor, overhead to labor plus fringe, and G&A to that subtotal: cost wrap = (1 + fringe/100)(1 + overhead/100)(1 + G&A/100). Actual accounting bases can differ and must match this assumption.

The multiple relates bill rate to base labor rate. In the builder, Margin means profit divided by final price: price wrap = cost wrap/(1 − margin/100). Markup means profit divided by loaded cost: price wrap = cost wrap × (1 + markup/100). Margin must be below 100%. Presets are illustrative examples, not verified industry benchmarks; dollar outputs round to cents and wrap multiples to six decimals.

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