corporate business team shaking hands and preparing to enter a meeting about wrap rates

5 Important Things to Know About Wrap Rates

Now that you have just gotten a big set of your competitor’s wrap rates, what should you do with them? Knowledge is power, but only if you use that knowledge effectively. While knowing if your overall costs are more or less than the competition is crucial information, how do you make that intelligence actionable? 

Help your Bid/No-Bid Decisions 

From a business development standpoint, knowing your competitor’s wrap rates can help you not only decide what opportunities to focus on, but which ones you shouldn’t pursue. Say you’ve been watching a contract that your competitor has had for the last four years. You know it’s up for a recompete later this year. It has traditionally been a cost-plus contract. If you just learned that the competitor’s wrap rate is higher than yours, this information gives you a cost advantage in the upcoming recompete. This information should influence your Pwin. Consequently, if you discover that the competitor’s cost structure is much lower than yours, this may not be the time to focus on this specific deal for this particular competitor. Perhaps you should consider a teaming strategy instead.

Wrap Rates Vary by Business Type and Location   

A company may have multiple wrap rates based on its location and cage code. If a company has different divisions that focus on services, development, or manufacturing, each of those businesses will have a different cost structure. A business segment located in a low-cost area may have a lower wrap rate based on cheaper occupancy costs.

Wrap Rates Change Over Time 

A specific contractor’s financial situation is always changing, so its wrap rate may change from year to year or quarter to quarter. A large long-term contract could expire next year, and new contract wins are about to start in the next few months. A company or division’s occupancy cost goes up or down based on office leasing changes. You may think that a certain competitor is difficult to beat on price, but that may change in the future. Having up-to-date cost information on your competitors gives you another data point to help shape your business development pipeline for the future.

You Can “Ghost” Your Competitors

If you have a dedicated price-to-win or competitive analysis department, you can use this information to ghost your competitor’s potential pricing scenarios. An up-to-date wrap rate analysis is a vital part of projecting a competitor’s potential price range.

Increase your Pwin 

While your proposals should always emphasize your technical differentiations, cost is always going to be a key component in winning, regardless of the award criteria. Utilizing the above information can help increase your Pwin. Up-to-date knowledge can help tip the scale in your favor.

Richter & Company provides actionable intelligence with its wrapRATER product while also offering great value. Maximize your Wrap database with Richter & Company’s wrapRATER. Additionally, any Price To Win analysis always includes Wrap Rates of your competitors at no additional cost. Stay ahead of your competition and find out more.