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

Shop Rate Calculator at 63% billable utilization factor: a worked example

This worked example runs the shop rate calculator numbers for a tougher week than the baseline: 63% billable utilization factor instead of the typical 88%. Calculate a blended shop rate from recoverable shop dollars and billable hours.

The inputs for this scenario

  • recoverable shop cost pool: 168,000 $ (held at the documented default)
  • billable production hours: 1,320 hr (held at the documented default)
  • billable utilization factor: 63 % (the input this scenario stresses; the baseline uses 88)

Working through the calculation

  • The calculation starts from the formula this tool documents: base shop rate = recoverable shop cost pool รท billable production hours.
  • effective shop rate after utilization works out to 80.18 $ / hr at these inputs, and this is the headline figure for the scenario.
  • Raw throughput works out to 127 $ / hr at these inputs.
  • billable utilization factor works out to 63 % at these inputs.
  • billable production hours works out to 1,320 hr at these inputs.

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 28.41% below the baseline at 80.18 $ / hr.
  • Use it when setting or revising standard hourly rates, before a quoting season, or after a major change in cost structure or volume. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • effective shop rate after utilization: 80.18 $ / hr (headline result)
  • Raw throughput: 127 $ / hr
  • billable utilization factor: 63 %
  • billable production hours: 1,320 hr

Run it with your numbers

  • To rerun this with your own numbers, open the live Shop Rate Calculator calculator, set billable utilization factor to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.