Wrap Rate Calculator

Turn a direct labor rate into a fully burdened (“wrapped”) rate. See every step of the cost buildup, your cost and price multipliers, and how you compare to typical services ranges.

Inputs

Direct labor rate ($/hour) What you pay the employee per hour (raw wage, before any burdens)

Fringe rate (%) Payroll taxes, health insurance, PTO, 401(k) match… Typical: 25–40%

Overhead rate (%) Costs that support delivery but aren’t billable: facilities, delivery management, non-billable tools

G&A rate (%) Running the company: executives, accounting, legal, BD/proposals

Fee / profit (%) — optional Set to 0 to see cost-only wrap

Rate structure (what base does each rate apply to?)

Overhead applied to (Direct Labor + Fringe) — fringe is treated as part of the labor cost, then overhead burdens the loaded labor. Common at services firms whose fringe pool allocates over direct labor. Fringe and Overhead each applied to Direct Labor — both pools use raw direct labor as the allocation base and are added side-by-side. Common when fringe is folded into a single overhead structure or applied on a total-labor base.

In both structures, G&A is applied to total cost input (all costs before G&A), and fee is applied last on top of total cost. There is no single “correct” structure — what matters is that your bases are consistent, documented in your accounting system, and applied the same way to every contract. See how this works.

Cost buildup

Cost wrap

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Fully burdened cost ÷ direct labor

Price wrap

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Fully burdened price (with fee) ÷ direct labor

Burdened cost / hr

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Before fee

Billing rate / hr

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With fee

How does this compare?

Typical fully burdened price wraps for professional/technical services often land in the ~1.6–2.2× range. That is a commonly observed market band, not a rule — it varies by labor category, market, facility footprint, prime vs. sub position, and contract type. Very lean subcontractors can sit below it; firms with heavy facilities or clearances can sit above it and still win.

How this works & where the numbers come from

“Wrap rate” (also: loaded rate, burdened rate, multiplier) is industry shorthand, not a regulatory term. It is the ratio between what an hour of labor costs you raw and what it costs (or is priced at) once every indirect pool has been layered on. The layers themselves come straight from how government cost accounting expects you to organize costs:

Direct labor (DL) — costs identified specifically with a contract (FAR 31.202, Direct costs).
Fringe — compensation-related costs (payroll taxes, insurance, PTO, retirement). Allowability of compensation is governed by FAR 31.205-6.
Overhead and G&A — indirect costs, grouped into “logical cost groupings” and allocated over an appropriate base (FAR 31.203, Indirect costs). For CAS-covered contractors, G&A allocation is specified by CAS 410 (48 CFR 9904.410) and other indirect allocation by CAS 418.
Fee/profit — negotiated, not a cost. Agencies often use structured approaches (e.g., FAR 15.404-4 profit-analysis factors).

The two base conventions in this calculator

Overhead on (DL + Fringe): Burdened cost = DL × (1 + fringe) × (1 + OH) × (1 + G&A). Fringe is part of the “loaded labor” that overhead then burdens, so the same percentages produce a higher wrap than the side-by-side structure.
Fringe and OH both on DL: Burdened cost = DL × (1 + fringe + OH) × (1 + G&A). The two pools don’t compound on each other.

Your indirect rates are whatever your actual pools and bases produce — the percentages you enter here should come from your provisional billing rates or your budget. DCAA’s incurred-cost (ICE) model and its audit process guidance describe how pools and bases get scrutinized. If you are pricing your first proposal, the structure you pick here is a declaration you will have to live with in your accounting system — consistency is the thing auditors test (FAR 31.203(d): the base "should be selected so as to permit allocation of the grouping on the basis of the benefits accruing to the several cost objectives").

Sources: FAR Subpart 31.2 (48 CFR 31.2); CAS 410 & 418 (48 CFR 9904); FAR 15.404-4. Retrieved July 2026 — always check acquisition.gov for the current text.

Disclaimer. FedCite is a private publication and is not affiliated with, endorsed by, or connected to the U.S. Government or any federal agency. This calculator is for general information only — it is not legal, accounting, or cost-proposal advice. Indirect rate structures must reflect your actual accounting practices; the “typical range” shown is a market observation, not a regulation or a target. Consult a government-contracts accountant (and your cognizant auditor’s guidance) before relying on any rate structure in a proposal.