Costing worked example

Machine Hour Rate with machine purchase cost of 450,000 $: a worked example in costing

Push machine purchase cost up to 450,000 $ and the picture changes. This example computes every intermediate figure at that operating point. Use when quoting machine time or comparing equipment economics.

The inputs for this scenario

  • Machine purchase cost: 450,000 $ (raised for this scenario; the documented default is 180,000)
  • Useful life: 7 years (unchanged)
  • Annual maintenance: 12,000 $ / yr (unchanged)
  • Annual power cost: 8,500 $ / yr (unchanged)
  • Annual floor space cost: 6,000 $ / yr (unchanged)
  • Available productive hours: 3,200 hr / yr (unchanged)
  • Operator labor rate: 34 $ / hr (unchanged)
  • Cycle time: 50 sec / part (unchanged)

Working through the calculation

  • Applying the documented formula (Annual ownership = machine cost ÷ useful life + maintenance + power + floor space) to the inputs above produces each figure below.
  • At this operating point the engine returns 62.37 $ / hr for loaded machine rate, the number this scenario is built around.
  • At this operating point the engine returns 28.37 $ / hr for machine-only rate.
  • At this operating point the engine returns 90,786 $ / yr for annual ownership.
  • At this operating point the engine returns 0.87 $ / part for cost per part.

How this compares with the baseline

  • Against the tool's baseline example, where machine purchase cost sits at 180,000 $ and the headline result is 50.32 $ / hr, this scenario comes in 23.96% above the baseline at 62.37 $ / hr.
  • 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. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Loaded machine rate: 62.37 $ / hr (headline result)
  • Machine-only rate: 28.37 $ / hr
  • Annual ownership: 90,786 $ / yr
  • Cost per part: 0.87 $ / part

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.