Contract Manufacturing, Job Shop Quoting & Make-to-Order worked example

Machine Hour Rate at 97% machine utilization factor: a worked example in contract manufacturing, job shop quoting & make-to-order

What does the result look like when machine utilization factor reaches 97%? The full calculation is worked below with real intermediate numbers. setting machine rates for routings, RFQs, and make-to-order production estimates

The inputs for this scenario

  • Recoverable machine cost pool (annual): 96,000 $ (unchanged)
  • Billable machine hours (annual): 780 machine hr (unchanged)
  • Machine utilization factor: 97 % (raised for this scenario; the documented default is 84)

Working through the calculation

  • Applying the documented formula (base machine-hour rate = recoverable machine cost pool รท billable machine hours) to the inputs above produces each figure below.
  • At this operating point the engine returns 119 $ / machine hr for effective machine-hour rate after utilization, the number this scenario is built around.
  • At this operating point the engine returns 123 $ / machine hr for raw throughput.
  • At this operating point the engine returns 97 % for machine utilization factor.
  • At this operating point the engine returns 780 hr for billable machine hours.

How this compares with the baseline

  • Against the tool's baseline example, where machine utilization factor sits at 84% and the headline result is 103 $ / machine hr, this scenario comes in 15.48% above the baseline at 119 $ / machine hr.
  • A figure at this level is achievable when machine utilization factor is genuinely sustained, not just peaked for a shift. It assumes a single blended cost pool and one utilization factor, so a cell mixing a high-cost 5-axis machine with cheaper supporting equipment needs separate rates rather than one averaged number.

Results at a glance

  • effective machine-hour rate after utilization: 119 $ / machine hr (headline result)
  • Raw throughput: 123 $ / machine hr
  • machine utilization factor: 97 %
  • billable machine hours: 780 hr

Run it with your numbers

  • Every input above is editable in the live Machine Hour Rate calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.