Calculate Pricing and Wrap Rate for the Contract Win With FP&A Platform Designed for Project-Based Bids

08-14-2024
Pricing and Wrap Rate

Competitive pricing is essential for government contractors (GovCons) to build a winning bid. Get the pricing right, and you’ll set your company up to reap a double benefit—more winning contracts and higher profit margins.

Nue’s cloud-based software platform for integrated financial planning and analysis (FP&A), designed uniquely for GovCons and other project-based companies, provides tools your staff can access across your entire enterprise to support a winning price strategy. Nue allows you to calculate initial pricing based on accurate input, track costs and other rate factors as a project progresses, and comply with contractual obligations and government regulations.

Calculate Pricing and Wrap Rate Flexibility

A competitive price covers costs and sets the highest profit margin that the market can bear. Nue FP&A software helps you strike the cost-vs.-profit balance:

A Nue dashboard provides indirect rates by cost pool, rate variances, and overall wrap rates.

  • Allocate indirect costs to different cost pools within your organization—including by department or service—based on direct labor hours, direct labor costs, machine hours, or any other measure that correlates with incurring an indirect cost.
  • Allocate indirect costs by rate variance, defined as the difference between the budgeted or standard rate used to allocate indirect costs and the actual rate incurred during a specific period. This variance analysis helps your company track how well you are controlling indirect costs and pinpoint areas that need attention.
  • Allocate indirect rates based on the overall wrap rate, which consists of direct labor and material costs plus indirect costs: fringe (payroll taxes, insurance, 401K plans, leave); overhead (office equipment, rent, utilities, and training); general and administrative (G&A—sales and marketing, travel expenses, back-office functions); and company profit. The overall wrap rate simplifies cost calculations by consolidating multiple indirect rates into a single multiplier. This allows complete recovery of all costs when you develop your pricing strategies and billing rates. The efficient and comprehensive management of costs also supports better financial planning and business decision-making within your firm.
  • Easily export Nue’s detailed indirect rate reporting into Excel.

Compare Results Among Various Pricing Plan Scenarios

Nue allows you to quickly run unlimited “what-if” analyses without starting from scratch, uncovering possible additional opportunities, and immediately seeing the indirect rate impact.

The dollar impact of the rate variance changes will help your firm determine if you can:

  • Make new infrastructure investments.
  • Reduce your bid rates.
  • Implement a combination of both strategies.

Use Reporting In Cost Proposals To Support Proposed Bid Rates

The same Nue tools that help you calculate profitable rates and prevent cost overruns can support regulatory compliance.

Numerous government entities—including the Defense Contract Audit Agency (DCAA), Federal Acquisitions Regulations (FAR), and federal agency contracting officers—enforce stringent cost control and reporting rules that require GovCon adherence to agreed-upon rates and documentation and justification of any deviations. Nue software tools:

  • Allow government regulators to analyze cost structures and review contractor cost practices to ensure fair and accurate cost allocations to agency contracts. A clear and detailed picture of indirect costs also helps ensure accurate billing and avoid payment disputes and delays.
  • Prepare your GovCon for audits by DCAA and other agencies. Comprehensive documentation backed up by calculations helps make your case that costs are reasonable, allowable, and allocable.
  • Help contract officers (Cos) make informed decisions during negotiation and administration. Let Nue’s solid backup numbers help you seal the deal by demonstrating the value you bring in your bid. As a project progresses, be the GovCon that supplies the CO with the data necessary for hassle-free contract administration.
  • All of the above will enhance your GovCon’s reputation for transparency and accountability among government customers and regulators.

Nue offers a free consultation and software demonstration at your convenience. Contact us and start managing your costs, prices, and rates to boost profitability and compliance confidence.