Rate & Pricing Model · RPM
The RPM is your complete financial model — indirect rates, wrap rate, labor utilization, and pricing power, all in one place. This is a real model built on a fictional company so you can see exactly what yours would look like.
Example Company
A fictional federal IT services contractor used to demonstrate the RPM. Every number below comes from a real model structure — the same structure built for actual clients.
Indirect Rates
These three rates — calculated from your actual Profit & Loss — are the inputs that drive everything else. Most contractors guess. The RPM calculates.
Wrap Rate Stack
Every layer stacks on the one before it. Miss one and you're losing money on every hour you bill.
Statement of Indirect Expenses
The indirect rates above are not guesses or industry averages. They are calculated directly from SSC's Profit & Loss — pool divided by base, every time.
Labor Utilization
The RPM maps every employee to how their time is charged — direct, overhead, or G&A. This is what drives the indirect rate calculation and determines your true cost structure.
| Employee / Title | Annual Salary | Pay Rate | Bill Rate | Charging |
|---|---|---|---|---|
| Davidson, H. · CEO | $185,000 | $88.94 | — | G&A |
| Suzuki, T. · Senior Engineer | $180,000 | $86.54 | $129.81 | Direct |
| Yamaha, K. · Senior DBA | $180,000 | $86.54 | $129.81 | Direct |
| Ferrari, B. · Project Manager | $180,000 | $86.54 | $129.81 | Direct OH |
| Bugatti, R. · Senior Analyst | $110,000 | $52.88 | $79.32 | Direct |
| Bentley, P. · Engineer/Scientist | $110,000 | $52.88 | $79.32 | Direct |
| Mercedes, M. · Software Engineer | $110,000 | $52.88 | $79.32 | Direct |
| Lotus, F. · Database Specialist | $110,000 | $52.88 | $79.32 | Direct |
| Delorean, B. · Technical Editor | $100,000 | $48.08 | $72.12 | Direct |
| Lexus, G. · Software Engineer | $125,000 | $60.10 | $90.15 | Direct |
| Tesla, N. · Software Engineer | $125,000 | $60.10 | $90.15 | Direct |
| Porsche, A. · Software Engineer | $130,000 | $62.50 | $93.75 | Direct |
| Fiat, L. · Software Engineer | $135,000 | $64.90 | $97.35 | Direct |
| Saab, K. · Technician | $75,000 | $36.06 | $54.09 | Direct |
| Total (16 shown of 29) | $1,875,000 | — | — | — |
Bill rates calculated at 1.50 multiplier · 80.1% labor utilization · 29 total employees · $393,333 monthly payroll
Why This Matters
On a $2M fixed price contract with 60% direct labor, a G&A rate that's 3 points higher than you thought pushes your wrap rate from 1.50 to 1.54 — and $50,000 in unrecovered indirect costs comes straight out of your profit before you deliver a single hour of work.
Your Next Step
What you just saw is an example. Your RPM uses your chart of accounts, your employees, your contracts, and your actual indirect rates — calculated from your real P&L. The result is a model that tells you exactly what to charge on every proposal you submit.
Set Up a Discovery Call →Jenny W. Clark · The GovCon CFO · solvability.com · jenny@solvability.com · 256-882-6276
LinkedIn: linkedin.com/in/solvabilityjwc