# CNC Machine Shop Hourly Rate Calculator

> Source: https://netray.co/tools/cnc-machine-shop-hourly-rate-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Build a defensible machine hour rate from purchase price, utilization, upkeep, power and operator cost, and see how utilization moves it.

## Category

cost-finance

## Industry

Job Shop Machining

## Audience

- Shop owner
- Estimator
- Cost accountant

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Machine purchase price (installed)

**Key:** price

**Type:** number

**Default:** 220000

**Min:** 0

**Step:** 5000

**Unit:** $

**Help:** Include rigging, install and initial tooling you will not expense.

#### Residual value at end of life

**Key:** resid

**Type:** number

**Default:** 20

**Min:** 0

**Max:** 90

**Step:** 1

**Unit:** %

**Help:** Share of purchase price you expect to recover.

#### Economic life

**Key:** years

**Type:** number

**Default:** 10

**Min:** 1

**Max:** 30

**Step:** 1

**Unit:** years

#### Cost of capital

**Key:** rate

**Type:** number

**Default:** 8

**Min:** 0

**Max:** 30

**Step:** 0.5

**Unit:** %

**Help:** Loan rate or your required return.

#### Scheduled hours per year

**Key:** sched

**Type:** number

**Default:** 3800

**Min:** 500

**Max:** 8760

**Step:** 100

**Unit:** hours

**Help:** Two shifts of roughly 1,900 hours is about 3,800.

#### Productive utilization

**Key:** util

**Type:** slider

**Default:** 65

**Min:** 20

**Max:** 95

**Step:** 1

**Unit:** %

**Help:** Spindle-cutting plus planned setup time as a share of scheduled hours.

#### Maintenance and repairs

**Key:** maint

**Type:** number

**Default:** 4

**Min:** 0

**Max:** 20

**Step:** 0.5

**Unit:** % of price per year

#### Average connected power

**Key:** kw

**Type:** number

**Default:** 18

**Min:** 0

**Step:** 1

**Unit:** kW

#### Electricity price

**Key:** kwh

**Type:** number

**Default:** 0.12

**Min:** 0

**Step:** 0.01

**Unit:** $/kWh

#### Loaded operator wage

**Key:** wage

**Type:** number

**Default:** 38

**Min:** 0

**Step:** 1

**Unit:** $/hour

**Help:** Wage plus payroll tax and benefits.

**Outputs:**

#### Annual depreciation

**Key:** dep

**Expr:** price * (1 - resid / 100) / years

**Format:** currency

**Description:** Straight line, residual deducted.

#### Annual interest on average investment

**Key:** interest

**Expr:** price * (1 + resid / 100) / 2 * rate / 100

**Format:** currency

**Description:** Average investment is (price + residual) / 2.

#### Annual maintenance

**Key:** maint_yr

**Expr:** price * maint / 100

**Format:** currency

#### Productive hours per year

**Key:** productive

**Expr:** sched * util / 100

**Format:** integer

#### Machine ownership cost per hour

**Key:** fixed_hr

**Expr:** (dep + interest + maint_yr) / productive

**Format:** currency

#### Power cost per hour

**Key:** power_hr

**Expr:** kw * 0.6 * kwh

**Format:** currency

**Description:** Assumes a 60% average load on connected kW while running.

#### Operator cost per productive hour

**Key:** labor_hr

**Expr:** wage * sched / productive

**Format:** currency

**Description:** Operator is paid for every scheduled hour, so idle time raises the rate.

#### Machine-only rate

**Key:** machine_only

**Expr:** fixed_hr + power_hr

**Format:** currency

#### Full cost rate per productive hour

**Key:** total_rate

**Expr:** fixed_hr + power_hr + labor_hr

**Format:** currency

**Primary:** true

**Description:** Cost before overhead recovery and profit.

**Chart:**

#### Hourly rate vs utilization

**Type:** line

**X:** util

**From:** 30

**To:** 95

**Steps:** 27

**Series:**

- total_rate
- machine_only

**Disclaimer:** Planning estimate. Overhead recovery, tooling and consumables are not included; add them in your quoting rate.

## Content

**Intro:** A machine hour rate is the cost of running one work center for one productive hour. Most small shops guess it, then quote against the guess. This calculator builds it from the machine up so you can see which input is moving your price.

**Sections:**

#### How to use the calculator

**Body:** Enter the installed price of the machine, expected life and residual value, your cost of capital, scheduled hours and the utilization you really achieve. Add maintenance, power and the loaded operator wage. The primary result is the cost per productive hour, and the chart shows how that rate climbs when utilization falls. Use the utilization your ERP reports, not the number you hope for.

#### The method behind the rate

**Body:** Ownership cost is straight-line depreciation plus interest on the average investment plus maintenance, divided by productive hours. Power is connected kW times an average load factor times your tariff. Labor is the loaded wage spread over productive hours because the operator is paid whether or not the spindle cuts. Overhead and profit are added later in the quote.

**Bullets:**

- Depreciation = price x (1 - residual) / life
- Interest = average investment x cost of capital
- Productive hours = scheduled hours x utilization
- Rate = (ownership + power + labor) per productive hour

#### Reading the result and common mistakes

**Body:** A new 5-axis at 40% utilization often costs more per hour than an older 3-axis at 75%, even though its purchase price is higher. The chart makes that visible. Common mistakes are using 8,760 hours as capacity, ignoring idle operator time, and copying one blended shop rate to every machine. Rates in JobBOSS, E2 Shop System and Global Shop Solutions work centers should be reviewed each year against this build-up.

**Cta:** If your ERP work center rates were typed in years ago, Netray can help compare them with actual cost and utilization pulled from the system.

**Faq:**

#### Should I use scheduled hours or 8,760 hours?

**Answer:** Use scheduled hours, the hours you actually staff the machine. Using calendar hours spreads cost over time you never sell, which understates the rate and makes quotes look cheaper than your real cost.

#### Is utilization the same as OEE?

**Answer:** No. Utilization here is productive time over scheduled time. OEE also includes speed and quality losses. For a quote rate, utilization is the more direct driver of cost per hour.

#### Does this include shop overhead?

**Answer:** No. It covers machine and operator cost only. Building, indirect labor and administration should be recovered through an overhead or burden rate added on top.

#### What utilization is realistic for a job shop?

**Answer:** Many job shops land between 50% and 75% on their main machines because of setups, waiting for material and short runs. Measure yours over a quarter before relying on a target.

## Search terms

cnc machine hourly rate calculator, machine shop hourly rate, how to calculate machine hour rate, cnc cost per hour, job shop shop rate calculator, machine rate calculation, jobboss machine rate, e2 shop system work center rate

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