WRAP Rate Calculator
Calculate the fully loaded hourly cost of an employee or contractor (the "WRAP Rate") by adding estimated benefits, taxes, and overhead costs as a percentage of the base wage.
Enter the base hourly wage and the estimated wrap percentage. Ensure consistent currency units (e.g., USD per hour, EUR per hour).
Enter Wage and Wrap Percentage
Understanding the WRAP Rate
What is a WRAP Rate?
A WRAP Rate is a calculation used primarily by businesses, especially in government contracting or professional services, to determine the fully loaded hourly cost of an employee or contractor. It "wraps" the direct hourly wage with all associated indirect costs, such as:
- Payroll taxes (Social Security, Medicare, Unemployment)
- Employee benefits (Health insurance, Retirement contributions, Paid time off)
- Workers' compensation and other insurance
- Overhead costs (Rent, Utilities, Administrative staff, Equipment depreciation)
- Indirect labor costs (Management, Support staff)
The WRAP rate is usually expressed as a percentage of the base hourly wage or as a total hourly dollar amount. This calculator determines the total hourly dollar amount based on a base wage and a combined wrap percentage.
WRAP Rate Formula
The simple formula used by this calculator is:
WRAP Rate = Base Hourly Wage * (1 + Wrap Percentage / 100)
Alternatively, you can think of it as:
WRAP Amount = Base Hourly Wage * (Wrap Percentage / 100)
WRAP Rate = Base Hourly Wage + WRAP Amount
This provides an estimate of the true cost per hour for budgeting, pricing proposals, or internal cost analysis.
WRAP Rate Examples
Explore these examples to see how the WRAP rate is calculated:
Example 1: Standard Employee WRAP
Scenario: Calculate the WRAP rate for an employee.
1. Known Values: Base Hourly Wage = $25.00, Estimated Wrap Percentage = 40%.
2. Calculation: WRAP Rate = $25.00 * (1 + 40 / 100) = $25.00 * (1 + 0.40) = $25.00 * 1.40
3. Result: WRAP Rate = $35.00
Conclusion: The fully loaded cost for this employee is estimated to be $35.00 per hour.
Example 2: High-Benefit Employee WRAP
Scenario: Calculate the WRAP rate for an employee with a generous benefits package.
1. Known Values: Base Hourly Wage = $40.00, Estimated Wrap Percentage = 60%.
2. Calculation: WRAP Rate = $40.00 * (1 + 60 / 100) = $40.00 * (1 + 0.60) = $40.00 * 1.60
3. Result: WRAP Rate = $64.00
Conclusion: The fully loaded cost is $64.00 per hour, reflecting the higher benefits and overhead.
Example 3: Contractor WRAP (Lower Overhead)
Scenario: Calculate the estimated WRAP rate for a contractor (usually lower percentage as client doesn't pay direct benefits).
1. Known Values: Base Hourly Wage = $75.00, Estimated Wrap Percentage = 15%.
2. Calculation: WRAP Rate = $75.00 * (1 + 15 / 100) = $75.00 * (1 + 0.15) = $75.00 * 1.15
3. Result: WRAP Rate = $86.25
Conclusion: The estimated loaded cost for this contractor is $86.25 per hour.
Example 4: Lower Wage Employee WRAP
Scenario: Calculate the WRAP rate for an entry-level employee.
1. Known Values: Base Hourly Wage = $15.00, Estimated Wrap Percentage = 35%.
2. Calculation: WRAP Rate = $15.00 * (1 + 35 / 100) = $15.00 * (1 + 0.35) = $15.00 * 1.35
3. Result: WRAP Rate = $20.25
Conclusion: The estimated fully loaded cost is $20.25 per hour.
Example 5: Calculating Just the WRAP Amount
Scenario: Find only the additional cost (the wrap amount) for an employee.
1. Known Values: Base Hourly Wage = $30.00, Estimated Wrap Percentage = 50%.
2. Calculation (Wrap Amount): WRAP Amount = $30.00 * (50 / 100) = $30.00 * 0.50
3. Result: WRAP Amount = $15.00. (The total WRAP Rate would be $30.00 + $15.00 = $45.00).
Conclusion: The additional cost "wrapped" around the base wage is $15.00 per hour.
Example 6: WRAP Rate in Euros
Scenario: Calculate the WRAP rate using Euros.
1. Known Values: Base Hourly Wage = €30.00, Estimated Wrap Percentage = 42%.
2. Calculation: WRAP Rate = €30.00 * (1 + 42 / 100) = €30.00 * (1 + 0.42) = €30.00 * 1.42
3. Result: WRAP Rate = €42.60
Conclusion: The estimated fully loaded cost is €42.60 per hour.
Example 7: Converting Salary to Hourly for WRAP
Scenario: An employee has a salary of $60,000/year. Assuming 2080 working hours/year, the Base Hourly Wage is $60,000 / 2080 ≈ $28.85. Estimated Wrap Percentage = 45%.
1. Known Values: Base Hourly Wage ≈ $28.85, Estimated Wrap Percentage = 45%.
2. Calculation: WRAP Rate = $28.85 * (1 + 45 / 100) = $28.85 * 1.45
3. Result: WRAP Rate ≈ $41.83
Conclusion: The estimated fully loaded cost for this salaried employee, on an hourly basis, is about $41.83.
Example 8: Zero Wrap Percentage
Scenario: Calculate the WRAP rate if there are no additional costs or the percentage is 0%.
1. Known Values: Base Hourly Wage = $20.00, Estimated Wrap Percentage = 0%.
2. Calculation: WRAP Rate = $20.00 * (1 + 0 / 100) = $20.00 * (1 + 0) = $20.00 * 1
3. Result: WRAP Rate = $20.00
Conclusion: If the wrap percentage is 0, the WRAP Rate is equal to the Base Hourly Wage.
Example 9: High Base Wage, Moderate Wrap
Scenario: Calculate the WRAP rate for a highly paid employee with a typical benefits package.
1. Known Values: Base Hourly Wage = $100.00, Estimated Wrap Percentage = 38%.
2. Calculation: WRAP Rate = $100.00 * (1 + 38 / 100) = $100.00 * (1 + 0.38) = $100.00 * 1.38
3. Result: WRAP Rate = $138.00
Conclusion: The estimated fully loaded cost is $138.00 per hour.
Example 10: WRAP Rate for a Budget Proposal
Scenario: A company needs to budget for a project employee for a government proposal.
1. Known Values: Proposed Base Hourly Wage = $55.00, Standard Proposal Wrap Percentage = 48%.
2. Calculation: WRAP Rate = $55.00 * (1 + 48 / 100) = $55.00 * (1 + 0.48) = $55.00 * 1.48
3. Result: WRAP Rate = $81.40
Conclusion: The company should budget $81.40 per hour for this resource in their proposal (before adding profit margin).
Frequently Asked Questions about WRAP Rates
1. What is a WRAP Rate?
A WRAP Rate is the fully loaded hourly cost of an employee or contractor, including their base wage plus estimated costs for benefits, taxes, and overhead, expressed as a single hourly rate.
2. What costs are included in the "wrap percentage"?
Typically, it includes costs that are a percentage of payroll or allocated per employee, such as payroll taxes, health/dental/vision insurance, retirement contributions, paid time off, workers' compensation, and an allocation of general and administrative overhead.
3. Why is calculating the WRAP Rate important?
It provides a realistic estimate of the true cost of labor, which is essential for accurate job costing, project budgeting, pricing proposals, and understanding profitability.
4. How is the Wrap Percentage determined?
It's calculated based on a company's historical financial data and cost allocation methods. It aggregates all the indirect labor and overhead costs and expresses them as a percentage of the total direct labor cost.
5. Does the WRAP Rate include profit?
No, the WRAP Rate typically represents the *cost* only. Profit margin is usually added *on top of* the WRAP rate when determining a billing rate for a client.
6. Can I use this calculator for a salaried employee?
Yes, but you first need to convert the annual salary to an hourly wage. A common method is to divide the annual salary by the standard working hours in a year (e.g., 40 hours/week * 52 weeks/year = 2080 hours/year).
7. Is the Wrap Percentage the same for all employees?
Not always. While some components (like allocated overhead) might be the same percentage, others (like health insurance costs or retirement contributions) can vary per employee, leading to slightly different wrap percentages or calculations per individual or group.
8. How accurate is the calculated WRAP Rate?
The accuracy depends entirely on the accuracy of the input 'Wrap Percentage'. If the percentage is a realistic estimate based on actual company costs, the calculated WRAP Rate will be a good approximation of the fully loaded cost.
9. What's the difference between WRAP Rate and Overhead Rate?
The Overhead Rate is usually just the percentage of indirect operating costs allocated to direct labor. The WRAP Rate includes the Overhead Rate *plus* direct labor burden costs like benefits and payroll taxes.
10. Are WRAP rates standard across industries?
No, WRAP rates vary significantly by industry, company size, location, and the generosity of benefit packages. There isn't a universal standard percentage.
