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Machine Hour Rate Calculator - MDCplus
MDCPLUS Free tool · no registration
A machine hour rate is the cost of running one machine for one hour. It works for CNC machines and for any other machine, such as presses, injection molding machines or robot cells. This calculator shows two numbers: the cost of a scheduled hour and the cost of a productive hour at your real utilization. Then it shows how the cost of a productive hour falls when utilization rises, which most hourly-rate sheets leave out.
1Pick your machine type
Each type fills in starting values. For anything else, choose Custom / other and adjust the details under Advanced, below the calculator.
2Your numbers
3What if utilization improves?
Check the values: price, useful life, load, gain and scheduled time must be above 0, and utilization must be between 1 and 100.
Advanced: depreciation, space, energy, overheadProductive hour now: $120
How the machine hour rate is calculated
- Depreciation = (price − residual value) ÷ useful life.
- Interest = (price + residual value) ÷ 2 × interest rate, on the average capital tied up.
- Space = floor area × space cost. Maintenance = price × maintenance %. Tooling as entered.
- Labor = operators × hourly cost × scheduled hours, because the operator is paid for the whole shift.
- Energy = power × average load × productive hours × electricity price, because the machine draws power mainly while it produces.
- Total = sum of the above × (1 + overhead %). Scheduled hours = hours per day × days per week × working weeks. Productive hours = scheduled hours × utilization.
- Cost per scheduled hour = total ÷ scheduled hours. Cost per productive hour = total ÷ productive hours.
- Cost carried by idle hours = (total − energy with overhead) × (1 − utilization).
Example with the default values: a machining center costing $150,000 with a 10-year life, one operator at $40 per hour, 15% overhead and 1,920 scheduled hours a year costs about $126,713 a year to run. That is $66 per scheduled hour, but at 55% utilization only 1,056 of those hours are productive, so a productive hour costs $120. A 10-point gain in utilization lowers it to $102, which is 15% less.
The result is a cost, not a price. A price per hour also needs the margin you want, and material is charged to the part. The calculator uses one machine and one shift pattern, so enter an average if shifts differ. The 48 working weeks leave out holidays and shutdowns. The starting values for each machine type are only a guide.
Utilization is the number that moves the result most, and it is the one most shops estimate instead of measure. MDCplus records machine states automatically, so the productive hours in the formula are measured. It is licensed per data collection point (one PLC or HMI is one license) and the price includes implementation and the server license.
Frequently asked questions
How do you calculate a machine hour rate?
Add up the yearly cost of the machine: depreciation, interest on the capital, floor space, energy, maintenance, tooling, operator labor and an overhead share. Then divide by the number of hours you spread it over. Dividing by scheduled hours gives the planned rate, and dividing by productive hours gives the rate you actually earn back.
What is the difference between a rate per scheduled hour and per productive hour?
A scheduled hour is any hour the machine is planned to work. A productive hour is an hour it actually produces parts. Idle time, setup and stops are paid for but produce nothing, so the cost of a productive hour is always higher than the cost of a scheduled hour.
Which costs should be included in a machine hour rate?
Depreciation, interest on the invested capital, floor space, energy, maintenance, tooling, operator labor and an overhead share. Material cost is normally left out, because it is charged to the part, not to the machine hour.
What utilization should I enter?
Enter the share of scheduled hours in which the machine really produces. If you do not measure it, use your best estimate and try several values, because the result is sensitive to this one number. Measured values are better than estimates.
How does utilization change the machine hour rate?
Most machine costs run whether or not the machine is cutting. When more scheduled hours become productive, the same yearly cost is spread over more hours, and the cost of a productive hour falls. The calculator shows this for the utilization gain you choose.
Does the calculator work only for CNC machines?
No. The formula works for any machine that has a purchase price, an operator and scheduled hours, such as a CNC machine, press, injection molding machine, robot cell or packaging line. The starting values for each machine type are only a guide, so replace them with your own.
How can I measure the real utilization of my machines?
By recording the machine states automatically instead of estimating them. MDCplus does this for CNC machines, PLCs and robots, and the first machine is connected within 1 to 2 hours. Check your machine in the connectivity checker.
Is the data I enter saved or sent anywhere?
No. The calculation runs in your browser and nothing is sent to MDCplus until you contact us.
Related: machine hourly rate in Excel, CNC hourly rate calculation, how to reduce machine cost per hour, optimize a VMC hourly rate, MDCplus FAQ, machine connectivity checker.
Last updated: . Prepared by the MDCplus team.
