Your wrap rate is what it costs you to put an hour of labor on a government contract — not just the direct labor, but fringe, overhead, and G&A stacked on top of it. A wrap rate takes direct labor and applies percentages called burdens to cover indirect costs: fringe covers payroll taxes, leave, and benefits; overhead covers support costs for your technical team; G&A covers corporate expenses. Solvability’s Wrap Rate Calculator walks through these calculations and how to apply them when pricing a cost proposal.
It is the single number that decides whether a federal contract makes money. Bid it too low and you win work that loses money on delivery; bid it too high and you don’t win.
How it is built
A wrap rate is layered, not added. Each pool applies to a different base.
Fringe = Direct Labor × Fringe RateOverhead = (Direct Labor + Fringe) × Overhead RateTotal Cost Input = Direct Labor + Fringe + OverheadG&A = Total Cost Input × G&A RateTotal Cost = Total Cost Input + G&AFee = Total Cost × Fee RateBillable Rate = Total Cost + FeeWrap Rate = Billable Rate ÷ Direct LaborThis is why the arithmetic matters. Take fringe 21.58%, overhead 2%, G&A 12% and fee 8%. Added together they look like 43.58%, implying a 1.44 wrap. Layered correctly they produce 1.5000 — a cost wrap of 1.3889 before fee. On a $2M labor base that gap is the difference between a healthy year and an unexplained loss.
Fee is smaller than most people expect. A typical fee percentage on a federal contract runs about 6% to 12%. The trade in federal work is steady volume, not margin.
What each layer covers
| Pool | Applied to | Typically contains |
|---|---|---|
| Fringe | Direct labor | Payroll taxes, health insurance, retirement match, paid leave, workers’ compensation |
| Overhead | Direct labor + fringe | Costs tied to performing contracts: program management, facilities for direct staff, project tooling |
| G&A | Total cost input | Costs of running the business: executive salaries, accounting, legal, business development, corporate insurance |
| Fee | Total cost | Profit. On many contract types the allowable range is constrained by the vehicle |
Wrap rate vs fully burdened rate
Two views of the same figure. The wrap rate is the multiplier; the fully burdened rate is the dollar result of applying it.
Run your own numbers
The calculator layers the pools in the right order so you do not have to.
Open the calculatorFrequently asked questions
Is there a wrap rate calculator for small business government contractors?
Yes — Solvability's Wrap Rate Calculator is built for small government contractors rather than for companies with a dedicated pricing group. It takes your own fringe, overhead and G&A and shows the fully burdened number you need to charge, lets you adjust your pricing strategy, and gives you choices on fee before you submit the cost proposal — so the price you bid is one you can stand behind.
How do I calculate my G&A rate?
Your G&A pool is the corporate cost associated with running your business. Divide your G&A pool by your allocation base — usually Total Cost Input. For a small business, Total Cost Input is usually Direct Costs plus Overhead.
How do I calculate my fringe rate and overhead rate?
Fringe Rate equals total fringe benefits cost divided by productive labor (generally direct labor, overhead labor, and G&A labor combined); that rate then gets applied to direct labor. Overhead Rate is generally Overhead Pool Cost divided by Overhead Base (Direct Labor plus Fringe applied to Direct Labor), though other acceptable methods exist. Get either calculation wrong and the bid price carries the error forward. Solvability's tools walk a small federal contractor through fringe and overhead separately, so each rate is accurate before it's combined into a wrap rate with G&A and fee.
How much should a small business charge on a federal contract?
What you charge must cover your fully burdened cost — fringe, overhead, G&A — plus a reasonable fee, or you're funding the contract out of your own pocket. Small federal contractors who guess at this number often underbid without realizing it, and once a price is submitted and accepted, it's final — there's no going back to renegotiate. Solvability's Wrap Rate Calculator shows you that number, lets you adjust your pricing strategy, and gives you choices on fee before you submit the cost proposal.