Machine Hour Rate Calculator

How it works

Fixed per year = (price − salvage) ÷ life + (price + salvage)/2 × interest + maintenance + space; hourly = fixed ÷ productive hours + kW × $/kWh + tooling/h + operator/h; quote = rate ÷ (1 − margin)

A machine hour rate converts the ownership and running costs of a piece of equipment into a single cost per productive hour so that jobs can be costed and quoted consistently. Ownership costs — straight-line depreciation, interest on the average capital tied up, maintenance contracts and the floor it occupies — are fixed for the year and are spread over the hours it is expected to be cutting, printing or moulding, not the hours it is switched on; this is why utilisation is the single most powerful lever on the rate, and why a machine planned for 3,600 hours but actually used for 2,000 quietly loses money on every job. Running costs — power, tooling, consumables and the operator’s attributable time — accrue only while it runs. Add the target margin by division, not multiplication, so the margin is a share of price.

Worked example

A $250,000 machine with $25,000 residual over 10 years, 7% capital, $12,000 maintenance and $4,800 floor space: $48,925 fixed a year ($22,500 depreciation, $9,625 interest), or $13.59 per hour over 3,600 hours. Add 18 kW at 14¢ ($2.52), $6 tooling and a $32 operator: $54.11 an hour all-in; at 25% margin quote $72.15.

Frequently asked questions