Machine Hour Rate Calculator

What this tool does

The rate spreads everything a machine costs in a year over the hours it actually produces. Depreciation is the price less what it will still be worth at the end, spread over its life; interest is charged on the money tied up in it, which on average is half the price plus the residual value. The divisor is what most often goes wrong: a machine on two shifts that is busy 80 % of the time produces roughly 3,000 hours a year, not 4,000, and every hour you overstate makes the rate look cheaper than it is. Operator wages are not included; add the operator's hourly cost to get the figure to use in a quote.

Formula

rate = [(price − residual) ÷ life + (price + residual) ÷ 2 × interest + space + price × maintenance %] ÷ productive hours + energy per hour

Variables

Symbol	Meaning	Unit
`pp`	Purchase price	—
`rv`	Residual value	—
`yl`	Useful life	years
`ir`	Annual interest rate	%
`sc`	Cost of the floor space per year	—
`mp`	Maintenance and repairs per year, % of the price	%
`ec`	Energy cost per running hour	per h
`hr`	Productive hours per year	h
`MH`	Cost per machine hour	per h
`DH`	Of which depreciation	per h
`IH`	Of which interest on the capital	per h
`SH`	Of which floor space	per h
`MM`	Of which maintenance	per h
`AC`	Total cost per year	—

Worked example

Purchase price200,000
Residual value20,000
Useful life10 years
Annual interest rate5 %
Cost of the floor space per year2400
Maintenance and repairs per year, % of the price3 %
Energy cost per running hour2 per h
Productive hours per year3000 h

Cost per machine hour12.63 per h
Of which depreciation6.00 per h
Of which interest on the capital1.83 per h
Of which floor space0.80 per h
Of which maintenance2.00 per h
Total cost per year37,900

Limitations

The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.
The tool works with whatever currency you use for the inputs; it does not convert between currencies.