Competitive pricing that wins contracts and maintains margins
Last reviewed on May 12, 2026.
Pricing approach is determined first by the contract type — firm-fixed-price work prices differently from time-and-materials, which prices differently from cost-reimbursement. For the full set of federal contract types and how risk allocates among them, see federal contract types.
| Cost Element | Rate/Amount | Calculation | Total |
|---|---|---|---|
| Direct Labor | $75/hr × 2,080 hrs | Base salary | $156,000 |
| Fringe (35%) | 35% of labor | $156,000 × 0.35 | $54,600 |
| Overhead (65%) | 65% of labor+fringe | $210,600 × 0.65 | $136,890 |
| G&A (15%) | 15% of subtotal | $347,490 × 0.15 | $52,124 |
| Fee/Profit (8%) | 8% of total cost | $399,614 × 0.08 | $31,969 |
| Total Price | $431,583 |
For the underlying accounting requirements — segregating direct from indirect costs, building defensible indirect rate pools, and the timekeeping discipline that makes these rates defensible at audit — see DCAA compliance and accounting systems. For the structural choices that drive whether a firm's rates are competitive in the first place — pool design, allocation bases, and when to split or merge pools — see indirect rate structures.