Costing worked example

Machine Hour Rate with machine purchase cost of 90,000 $: a worked example in costing

Here is what the math looks like when conditions slip. We hold every other input steady and drop machine purchase cost to 90,000 $, then walk the calculation through step by step. Build a loaded hourly machine rate from depreciation, maintenance, power, space, and labor.

The inputs for this scenario

  • Machine purchase cost: 90,000 $ (the input this scenario stresses; the baseline uses 180,000)
  • Useful life: 7 years (held at the documented default)
  • Annual maintenance: 12,000 $ / yr (held at the documented default)
  • Annual power cost: 8,500 $ / yr (held at the documented default)
  • Annual floor space cost: 6,000 $ / yr (held at the documented default)
  • Available productive hours: 3,200 hr / yr (held at the documented default)
  • Operator labor rate: 34 $ / hr (held at the documented default)
  • Cycle time: 50 sec / part (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Annual ownership = machine cost ÷ useful life + maintenance + power + floor space.
  • Loaded machine rate works out to 46.3 $ / hr at these inputs, and this is the headline figure for the scenario.
  • Machine-only rate works out to 12.3 $ / hr at these inputs.
  • Annual ownership works out to 39,357 $ / yr at these inputs.
  • Cost per part works out to 0.64 $ / part at these inputs.

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 7.99% below the baseline at 46.3 $ / hr.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to machine purchase cost, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. 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.

Results at a glance

  • Loaded machine rate: 46.3 $ / hr (headline result)
  • Machine-only rate: 12.3 $ / hr
  • Annual ownership: 39,357 $ / yr
  • Cost per part: 0.64 $ / part

Run it with your numbers

  • To rerun this with your own numbers, open the live Machine Hour Rate calculator, set machine purchase cost to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.