Contract Manufacturing, Job Shop Quoting & Make-to-Order calculator
Shop Rate Calculator
Use this calculator to convert recoverable overhead, labor burden, equipment cost, occupancy, support labor, and profit requirement into an effective shop rate per billable hour.
What this calculator does
- Calculate a blended shop rate from recoverable shop dollars and billable hours.
- setting or checking the hourly rate used in job-shop quotes
- The result estimates the hourly shop rate required to recover the cost pool.
Formula used
- base shop rate = recoverable shop cost pool ÷ billable production hours
- effective shop rate after utilization = base shop rate × billable utilization factor
Inputs explained
- recoverable shop cost pool: Include indirect labor, rent, utilities, depreciation, tooling maintenance, supervision, quality support, software, and target profit if your shop rate includes it.
- billable production hours: Use realistic billable hours after holidays, meetings, planned downtime, non-billable support, setup recovery rules, and utilization limits.
- billable utilization factor: Use the percentage of available hours expected to be recoverable through customer jobs.
How to use the result
- Use it to set quote rates, compare departments, test utilization assumptions, and protect overhead recovery.
- Treat the result as an estimate until the RFQ package, customer drawing revision, material quote, routing, setup standard, shop rate, outside service quote, scrap history, open capacity, due date, and quoted commercial terms are confirmed for the same job, lot size, and customer order.
Common questions
- What is the shop rate calculator for? Use this calculator to convert recoverable overhead, labor burden, equipment cost, occupancy, support labor, and profit requirement into an effective shop rate per billable hour.
- What information should I enter? Enter recoverable shop cost pool, billable production hours, and billable utilization factor using the same estimating period, shop calendar, cost pool, or customer-order scope.
- What does the result tell me? The result estimates the hourly shop rate required to recover the cost pool.
- When is the result only an estimate? Treat the result as an estimate until the RFQ package, customer drawing revision, material quote, routing, setup standard, shop rate, outside service quote, scrap history, open capacity, due date, and quoted commercial terms are confirmed for the same job, lot size, and customer order.
Last reviewed 2026-05-12.