Machine Shop Hourly Rate Calculator
Set a shop rate that actually covers your costs. Enter machine cost, operating hours, labor, overhead, and utilization to get a fully-loaded hourly rate with margin.
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Get itWhy utilization is the hidden lever
A machine that's only busy 70% of the time has to recover its cost in fewer billable hours, which raises the rate. This build-up spreads depreciation, facility overhead, and maintenance over your actual productive hours, then adds labor, energy, and margin. Quote below this rate and you're slowly funding the shop out of pocket.
How it’s calculated
Hourly cost = depreciation + overhead spread over productive hours (operating hours × utilization) + energy + labor; rate = ÷ (1 − margin).
Results update as you type and are estimates, not professional advice — verify important decisions with a qualified professional.
Worked example
An $80k machine over 7 years at 70% utilization, $22 labor and overhead, needs about a $69/hour rate at a 30% margin.
Common mistakes
- Ignoring utilization, which raises the true rate.
- Forgetting overhead and maintenance in the build-up.
Where it is used
- Setting a defensible shop hourly rate.
- Checking whether your quoted rate covers costs.
Frequently asked questions
Why does utilization raise the rate?
Fixed costs are spread over billable hours. At 70% utilization you have fewer hours to cover the same depreciation and overhead, so each hour costs more.
Should labor be in the machine rate?
If one operator runs one machine, yes. For lights-out or multi-machine tending, labor per machine-hour is lower.
Is depreciation the purchase price?
It's the purchase price spread over the machine's useful life, then over productive hours — an hourly slice of the capital cost.
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