BIZOMAT MAKEOS · Money
Machine Hour Rate
What does this machine cost per productive hour to own and run?
Hourly cost of a machine from capital recovery, floor space, power, maintenance, tooling and consumables over its productive hours, with operator cost to give a full machine-and-operator rate for quoting.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Installed machine cost | AUD | Purchase price including installation and commissioning. |
| Resale value at end of life | AUD | Expected resale value at the end of its economic life. |
| Economic life | years | Years the machine will be used economically. |
| Interest (discount) rate | % | Your cost of capital. |
| Productive hours per year | h | Hours per year the machine actually produces (not attendance hours). |
| Floor space cost per year | AUD/yr | Share of building cost for the machine’s floor area. |
| Average power drawn when running | kW | Average electrical demand while producing. |
| Electricity price | AUD/kWh | Electricity price. |
| Maintenance per year | AUD/yr | Planned and breakdown maintenance per year. |
| Tooling and consumables per hour | AUD/h | Cutting tools, coolant and consumables per productive hour. |
| Operator cost per hour (fully loaded) | AUD/h | Operator wage plus on-costs per hour (0 for machine-only rate). |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Installed machine cost
- What it is
- The full cost of getting the machine into production: purchase price plus freight, foundations, installation, commissioning and initial training.
- Units and format
- Enter a number in AUD: Australian dollars. The form accepts 0.000001 AUD or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 350000 AUD as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A higher installed cost raises the capital recovery and the hourly rate.
- Get it right
- Use the installed cost, not the quoted machine price alone.
What this means: Resale value at end of life
- What it is
- What you expect to recover by selling the machine at the end of its economic life, less any cost of removal.
- Units and format
- Enter a number in AUD: Australian dollars. The form accepts 0 AUD or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 50000 AUD as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A higher resale value lowers the capital recovery per year.
- Get it right
- Use a cautious estimate; resale values of specialised machines can be low.
What this means: Economic life
- What it is
- The number of years the machine will be used before it is replaced for economic reasons, which is often shorter than its physical life.
- Units and format
- Enter a number in years: years. The form accepts 1 years to 50 years. Use a whole number. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 10 years as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A longer life spreads the capital over more years and lowers the hourly rate.
- Get it right
- This is the economic life for costing, not the tax depreciation period.
What this means: Interest (discount) rate
- What it is
- Your organisation’s cost of capital: the yearly return the money tied up in the machine must earn, usually set by your finance team.
- Units and format
- Enter a number in %: percent: the number is read as a percentage, so type 8 for 8 %. The form accepts 0% to 100%. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 8% as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- A higher rate raises the capital recovery per year.
- Get it right
- Type the percentage itself, not a fraction.
What this means: Productive hours per year
- What it is
- The hours per year the machine actually makes parts, after allowing for set-ups, breakdowns, idle time and unmanned shifts. All fixed yearly costs are spread over these hours.
- Units and format
- Enter a number in h: hours. The form accepts 0.000001 h to 8784 h. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 3000 h as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Fixed costs per hour are inversely proportional to productive hours.
- Get it right
- Use measured productive hours, not shift or attendance hours; overstating them understates the rate.
What this means: Floor space cost per year
- What it is
- The yearly building cost charged to the floor area the machine and its access space occupy: rent or depreciation, rates, lighting and heating per square metre.
- Units and format
- Enter a number in AUD/yr: Australian dollars per year. The form accepts 0 AUD/yr or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 8000 AUD/yr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Get it right
- Include the access and storage area around the machine, not just its footprint.
What this means: Average power drawn when running
- What it is
- The average electrical power the machine draws while it is producing, measured with a power meter or estimated from the motor ratings and typical load.
- Units and format
- Enter a number in kW: kilowatts. The form accepts 0 kW to 100000 kW. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 12 kW as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Power cost per hour is this power times the electricity price.
- Get it right
- Average draw is usually well below the total of motor nameplate ratings; measure it if you can.
What this means: Electricity price
- What it is
- What you pay per kilowatt-hour of electricity, from your energy bill.
- Units and format
- Enter a number in AUD/kWh: Australian dollars per kilowatt-hour. The form accepts 0 AUD/kWh to 100 AUD/kWh. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 0.25 AUD/kWh as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Power cost per hour rises in direct proportion to the price.
- Get it right
- Include network and demand charges for a realistic figure.
What this means: Maintenance per year
- What it is
- The yearly cost of keeping the machine running: planned servicing, spare parts, breakdown repairs and service contracts.
- Units and format
- Enter a number in AUD/yr: Australian dollars per year. The form accepts 0 AUD/yr or more. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 12000 AUD/yr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Get it right
- Use records from similar machines; maintenance usually rises as a machine ages.
What this means: Tooling and consumables per hour
- What it is
- The cost of cutting tools, coolant, lubricants and other consumables used for each productive hour, from your tooling spend divided by productive hours.
- Units and format
- Enter a number in AUD/h: Australian dollars per hour. The form accepts 0 AUD/h to 1000000 AUD/h. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 15 AUD/h as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Added directly to the machine rate.
What this means: Operator cost per hour (fully loaded)
- What it is
- The full hourly cost of the operator: wage plus superannuation, payroll tax, leave, insurance and other on-costs. Zero gives a machine-only rate.
- Units and format
- Enter a number in AUD/h: Australian dollars per hour. The form accepts 0 AUD/h to 1000000 AUD/h. Required: the tool does not calculate until every input is valid.
- Example
- The form opens with 65 AUD/h as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Added directly to give the machine-and-operator rate.
- Get it right
- If one operator runs several machines, enter only the share of their cost for this machine.
Method and formulas
- Capital recovery per year = (cost − salvage) × A/P(i, n) + salvage × i.
- Hourly cost = (capital + space + maintenance) ÷ productive hours + power × price + tooling.
- Machine-and-operator rate = machine rate + operator cost.
- Example: the default machine costs $40.90 per hour, or $106 with an operator.
Limitations
- Excludes general factory overheads (supervision, administration, quality) unless included in the inputs.
- Productive hours are the most sensitive input.
- Example values are illustrations. Replace them with values for your actual task.
Typical uses
- Set shop rates for quoting
- Compare the cost of running old and new machines
- Decide whether to outsource an operation
Who it is for
- Engineering managers
- Cost estimators
- Finance and business analysts
What you get
- Capital cost per hour
- Running cost per hour
- Machine rate and machine-plus-operator rate
Interpreting the result
- Under-utilised machines have high hourly rates; quote on realistic productive hours.
References
- Machinery’s Handbook, 29th edition (Industrial Press, 2012), printed pp. 134–146, 1153–1160. Topic reference; no source tables or recommended settings are reproduced.
Learn the Concepts Behind This Tool
These BIZOMAT Library readings explain the method this tool uses, with worked examples.
Method explained here · BIZOMAT original book
Procedures, people, records and cost
In Eddy-Current Inspection by the Numbers
What it covers: What a written eddy-current procedure contains, personnel qualification, reference checks and what to do when one fails, the records that make a result traceable, and the cost per part.
Method explained here · BIZOMAT original book
Pulsed lasers for marking and engraving
In Laser Processing by the Numbers
What it covers: Pulse energy, peak power, fluence and spot overlap for a pulsed marking laser, marking time for a two-dimensional code, and fitting the marking station to the line's takt time.
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.