How do you set a machine hourly rate?
The rate builds from depreciation (investment ÷ (years × productive hours)), energy (power × energy price), maintenance and labour. The sum is the cost price; overhead is added on top, then your margin. Realistic productive hours (often 1,400–1,800/year rather than calendar hours) make the biggest difference.
Frequently asked questions
Why not just divide by 2,000 hours?
A machine rarely runs productively for every working hour. Use the actually billable/productive hours — setup, downtime and idle time don’t count, otherwise your rate is too low.
Should operator wage be in the machine rate?
It depends on your costing. For a manned machine you include the wage; for unmanned (night) running you leave it out or reduce it.
What is a normal overhead?
Overhead (premises, IT, indirect staff) is often between 15% and 30% of direct costs, depending on your company.