How do you calculate the cost of downtime?

Multiply downtime hours by your output rate to get lost units, multiply those by contribution per unit for lost margin, then add standing labor (downtime hours x labor cost per hour). With 3.5 hr, 115 units/hr, $6.75/unit and $240/hr labor, that is 402.5 lost units, $2,716.88 lost contribution plus $840 labor = $3,556.88.

Should I use contribution margin or full unit price in downtime cost?

Use contribution per unit (price minus variable cost), not full sale price. The materials and consumables for unbuilt units were never spent, so only the margin those units would have earned is truly lost. Using full price overstates the cost.

Why include standing labor if workers are idle?

Because you still pay them. During an outage operators, line leads and often maintenance are on the clock but producing nothing, so that $840 in the example is real cash out the door with zero output against it.

What is a good downtime cost benchmark per hour?

There is no universal figure — it scales with margin and line speed. In the example each idle hour costs about $1,016 ($3,556.88 / 3.5 hr). High-volume automotive lines can exceed $20,000/hr; low-margin job shops may be a few hundred. Calculate your own rather than borrowing a benchmark.

Downtime cost vs OEE — how are they related?

OEE measures the percentage of planned time you actually produce good parts; downtime cost translates the availability losses inside OEE into dollars. OEE tells you how bad the problem is; downtime cost tells finance how much it is worth fixing.

Production calculator

Downtime Cost Calculator

Downtime cost quantifies what an unplanned production line stoppage actually drains from the P&L, combining the contribution margin you fail to earn on units never built with the labor you keep paying while the line sits idle. Operations managers, OEE improvement teams and maintenance planners use it to justify spare-parts inventory, preventive maintenance budgets and rapid-response staffing. On a conveyor or assembly line, a single hour of downtime is rarely just lost throughput — it ripples into overtime, expedited freight and missed ship dates. Putting a hard dollar figure on each idle hour turns a vague nuisance into a number a CFO will fund.

What this calculator does

Quantify contribution margin and labor impact from unplanned downtime.
Use when prioritizing maintenance, reliability, and bottleneck improvement work.
It computes the total dollar cost of a production stoppage by adding lost contribution margin on unbuilt units to the labor cost that continues during the outage.

Formula used

Lost units = downtime hours × output rate
Lost contribution = lost units × contribution per unit
Standing labor = downtime hours × standing labor cost
Downtime cost = lost contribution + standing labor

Inputs explained

Downtime: undefined
Output rate: undefined
Contribution per unit: undefined
Standing labor cost: undefined

How to use the result

Use it after an unplanned line stop, when sizing PM budgets, or when building a downtime-reduction business case for new equipment or staffing.
It captures direct margin and standing labor only — it ignores downstream effects like expedited freight, scrap from restart, penalty clauses and lost future orders, so treat it as a conservative floor.

Current U.S. benchmarks

As of Jun 2026, average hourly earnings in U.S. manufacturing are $30.27 (BLS), up 4.4% from a year earlier. Burdened shop rates typically run 1.3 to 1.8 times earnings once benefits and overhead are loaded.
The U.S. has 21,668 machinery manufacturing establishments employing about 1,086,146 workers (Census County Business Patterns, 2023).

Common questions

How do you calculate the cost of downtime? Multiply downtime hours by your output rate to get lost units, multiply those by contribution per unit for lost margin, then add standing labor (downtime hours x labor cost per hour). With 3.5 hr, 115 units/hr, $6.75/unit and $240/hr labor, that is 402.5 lost units, $2,716.88 lost contribution plus $840 labor = $3,556.88.
Should I use contribution margin or full unit price in downtime cost? Use contribution per unit (price minus variable cost), not full sale price. The materials and consumables for unbuilt units were never spent, so only the margin those units would have earned is truly lost. Using full price overstates the cost.
Why include standing labor if workers are idle? Because you still pay them. During an outage operators, line leads and often maintenance are on the clock but producing nothing, so that $840 in the example is real cash out the door with zero output against it.
What is a good downtime cost benchmark per hour? There is no universal figure — it scales with margin and line speed. In the example each idle hour costs about $1,016 ($3,556.88 / 3.5 hr). High-volume automotive lines can exceed $20,000/hr; low-margin job shops may be a few hundred. Calculate your own rather than borrowing a benchmark.
Downtime cost vs OEE — how are they related? OEE measures the percentage of planned time you actually produce good parts; downtime cost translates the availability losses inside OEE into dollars. OEE tells you how bad the problem is; downtime cost tells finance how much it is worth fixing.

Last reviewed 2026-05-12.