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

Shop Rate Calculator at 99% billable utilization factor: a worked example

What does the result look like when billable utilization factor reaches 99%? The full calculation is worked below with real intermediate numbers. setting or checking the hourly rate used in job-shop quotes

The inputs for this scenario

  • recoverable shop cost pool: 168,000 $ (unchanged)
  • billable production hours: 1,320 hr (unchanged)
  • billable utilization factor: 99 % (raised for this scenario; the documented default is 88)

Working through the calculation

  • Applying the documented formula (base shop rate = recoverable shop cost pool ÷ billable production hours) to the inputs above produces each figure below.
  • At this operating point the engine returns 126 $ / hr for effective shop rate after utilization, the number this scenario is built around.
  • At this operating point the engine returns 127 $ / hr for raw throughput.
  • At this operating point the engine returns 99 % for billable utilization factor.
  • At this operating point the engine returns 1,320 hr for billable production hours.

How this compares with the baseline

  • Against the tool's baseline example, where billable utilization factor sits at 88% and the headline result is 112 $ / hr, this scenario comes in 12.5% above the baseline at 126 $ / hr.
  • A figure at this level is achievable when billable utilization factor is genuinely sustained, not just peaked for a shift. It is an average rate for the whole cost pool — it does not split rates by work center, so a $200/hr 5-axis cell and a manual saw shouldn't share one number.

Results at a glance

  • effective shop rate after utilization: 126 $ / hr (headline result)
  • Raw throughput: 127 $ / hr
  • billable utilization factor: 99 %
  • billable production hours: 1,320 hr

Run it with your numbers

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

Last reviewed 2026-05-12.