How do you calculate machine hour rate?

Annualize ownership cost (machine purchase cost ÷ useful life, plus maintenance, power, and floor space), divide by the hours the machine actually runs per year to get the machine-only rate, then add the operator labor rate to get the loaded rate. With the defaults that is $52,214 ÷ 3,200 = $16.32/hr, + $34 = $50.32/hr loaded.

What is a good shop rate per hour?

For a 3-axis CNC with an operator, $65–95/hr is typical for a US small/mid shop; 5-axis work runs $120–175/hr, and manual machines $45–65/hr. These are cost-plus-overhead figures before profit margin.

What is the difference between machine rate and loaded machine rate?

The machine-only rate covers just equipment cost (depreciation, maintenance, power, space) per running hour. The loaded rate adds the operator labor rate — the full cost to run the machine with a person tending it. Use the loaded rate for quoting and the machine-only rate to compare equipment.

Why is my machine cost per hour so high?

Almost always low available productive hours. Ownership cost is fixed per year, so running the machine fewer hours spreads that cost over fewer hours and inflates the rate. Add a second shift or more work before assuming the machine is too expensive.

Does machine hour rate include labor?

The machine-only rate does not; the loaded machine rate does. Use the loaded rate for quoting, and the machine-only rate when comparing equipment economics independent of who runs it.

How do I get cost per part from the machine hour rate?

Multiply the loaded rate by the cycle time in seconds and divide by 3,600. At $50.32/hr and a 50-second cycle, that is $0.70 per part of machine + labor cost.

Costing calculator

Machine Hour Rate Calculator

The machine hour rate is the fully loaded cost of running one machine for one hour, built by annualizing ownership and operating costs and dividing by the hours the machine actually runs. Shop owners, estimators, and cost engineers use it to quote machine time, run make-vs-buy analysis, and justify capital purchases — and the single biggest lever on the result is the available productive hours, not the cost inputs.

What this calculator does

Build a loaded hourly machine rate from depreciation, maintenance, power, space, and labor.
Use when quoting machine time or comparing equipment economics.
Builds a fully loaded hourly machine rate by annualizing depreciation, maintenance, power, and floor space, dividing by the hours the machine actually runs, then adding operator labor — and rolls that into a cost per part at your cycle time.

Formula used

Annual ownership = machine cost ÷ useful life + maintenance + power + floor space
Machine-only rate = annual ownership ÷ available productive hours
Loaded machine rate = machine-only rate + operator labor rate
Cost per part = loaded rate × cycle time ÷ 3,600

Inputs explained

Machine purchase cost: undefined
Useful life: undefined
Annual maintenance: undefined
Annual power cost: undefined
Annual floor space cost: undefined
Available productive hours: undefined
Operator labor rate: undefined
Cycle time: undefined

How to use the result

Use it when quoting machine time, comparing the economics of two machines, or justifying a capital purchase. Rerun it whenever shifts, demand, or wages change, because available hours and labor rate move the result most.
The result is a cost, not a price — it excludes profit margin, SG&A, and shop-wide overhead, so add those before quoting a customer. Depreciation is straight-line, so financing interest is not captured; add it to annual maintenance if relevant.

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.
U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate machine hour rate? Annualize ownership cost (machine purchase cost ÷ useful life, plus maintenance, power, and floor space), divide by the hours the machine actually runs per year to get the machine-only rate, then add the operator labor rate to get the loaded rate. With the defaults that is $52,214 ÷ 3,200 = $16.32/hr, + $34 = $50.32/hr loaded.
What is a good shop rate per hour? For a 3-axis CNC with an operator, $65–95/hr is typical for a US small/mid shop; 5-axis work runs $120–175/hr, and manual machines $45–65/hr. These are cost-plus-overhead figures before profit margin.
What is the difference between machine rate and loaded machine rate? The machine-only rate covers just equipment cost (depreciation, maintenance, power, space) per running hour. The loaded rate adds the operator labor rate — the full cost to run the machine with a person tending it. Use the loaded rate for quoting and the machine-only rate to compare equipment.
Why is my machine cost per hour so high? Almost always low available productive hours. Ownership cost is fixed per year, so running the machine fewer hours spreads that cost over fewer hours and inflates the rate. Add a second shift or more work before assuming the machine is too expensive.
Does machine hour rate include labor? The machine-only rate does not; the loaded machine rate does. Use the loaded rate for quoting, and the machine-only rate when comparing equipment economics independent of who runs it.

Last reviewed 2026-05-12.