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Machine hour rate

Enter machine value, utilization and running costs to get the cost of each hour and each part, the basis for quotes, make-or-buy decisions and valuing OEE.

Pre-sizing and estimating tool: results do not replace design, calculations or reports signed by a licensed professional, nor verification against the applicable codes and standards.

Preliminary estimate
Machine
Utilization
Variable and space costs

Monthly floor space cost: rent or building depreciation, property tax, cleaning, lighting and HVAC.

Operator and output
—Machine hour rate with operator
—

Hour rate breakdown

Items per productive hour: fixed, variable and operator.

Tap the chart to see the values.

Hour rate versus hours worked

Fixed costs are diluted by more shifts: the same machine costs less per hour when it works more.

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Next step

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Method, assumptions and references

Equations used

VDI 3258: capital per year = (V − R) ÷ n + (V + R) ÷ 2 × i; annuity: (V − R ÷ (1 + i)ⁿ) × CRF(i, n)
Productive hours = shifts × hours × days × availability
Hour rate = (fixed per year ÷ hours + energy + maintenance + consumables) × (1 + overhead) + operators × operator cost
Cost per part = hour rate ÷ (3600 ÷ cycle × OEE)

Assumptions and limits

  • Maintenance treated as proportional to hours worked; energy from average, not nameplate, power.
  • Pre-tax values; tax depreciation may differ from economic depreciation.

Standards and technical documents

  • VDI 3258 Blatt 1 e 2: Kostenrechnung mit Maschinenstundensätzen (cálculo de custo-hora de máquina)
  • Horngren, C. T.; Datar, S. M.; Rajan, M. V. Cost Accounting: A Managerial Emphasis. Pearson
  • Martins, E. Contabilidade de Custos. Atlas

U.S. regulations

  • IRS Publication 946: MACRS recovery periods (7-year property for most industrial machinery)
  • One Big Beautiful Bill Act (2025): 100% bonus depreciation for qualified property acquired after January 19, 2025; Section 179 limit of $2.5 million

Frequently asked questions

How do I calculate a machine hour rate?

Add annual fixed costs (depreciation, interest on capital, floor space, insurance) and divide by productive hours; then add variable costs per hour (energy, maintenance, consumables), overhead and the operator.

Should I use tax depreciation?

For costing and quotes, use the machine’s real economic life. Tax depreciation (MACRS or 100% bonus) is for taxes, not necessarily for pricing.

Why does the hour rate fall with more shifts?

Because fixed costs are spread over more hours. A $600,000 machine on one shift can cost nearly twice as much per hour as on three shifts.