Numerous shops use machine hourly rates for job cost estimates and quotes. But there's little readily accessible information on how to derive a suitable hourly rate. This free CNC machine hourly rate calculator works it out for you from what the machine costs to own and how much you'll run it:
CNC Machine Hourly Rate Calculator
1,700 productive hours a year, 17,000 over the machine's life.
Total cost of ownership = purchase price + loan interest + consumables over the useful life − trade-in value. Machine cost per hour = total cost of ownership ÷ productive hours over the useful life, where productive hours = hours per day × days per year × (1 − downtime). The hourly rate adds the operator rate, then the markup. Interest assumes a fixed-rate loan with monthly payments.
The basic strategy is to determine the machine's Total Cost of Ownership (TCO) over its useful life and then divide that by how many hours it will be used.
Let's go over each piece of data that must be entered:
- Purchase Price: This is the cnc machine cost and its basic tooling. For example, a mill will probably need a vise and a few other pieces of basic tooling. Fixtures used for particular parts should not be included here.
- Finance: Check the box if you want to finance the machine.
- Depost: The amount you're putting down on the machine.
- Loan Term (yrs): How many years will you finance it for.
- Annual Interest (%): What interest rate is the financing?
- Total Loan Interest Paid: This just tells you how much loan interest will be added to the Total Cost of Ownership.
- Useful Life (yrs): How many years until you'll be ready to trade-in the machine?
- Trade-in Value: What will the value of the machine be when you're ready to trade it in. If you wonder, take a look at used machinery prices for similar machines.
- Annual Consumables Cost: This is the cost of tooling, lubricants, repairs, spare parts, and whatever else you'd like to include. Some shops want to bill all the cutters into the consumables cost while others want them as a separate line item by job since tool wear can vary quite a lot from job to job.
- Operator Rate/Hr: The hourly rate you'll need to pay this machine's operator.
- Working Hours/Day: How many hours a day will you run the machine? 8 is the default. If you have multiple shifts using the machine, it'll be more.
- Working Days/Year: Will you operate the machine every day or some subset?
- Downtime (%): Budget some percentage of time the machine will not be in use. Perhaps due to needing repairs, because work gets slow, or some other reason.
- Total Cost of Ownership: This factors in all of the above costs to give you a Total Cost of Ownership
- Markup (%): Some shops will want to apply a profit margin directly to the hourly rate of each machine. Others will keep it as a separate line item. You can do either by entering a value here or leaving it as 0%.
- Hourly Cost w/ Labor: This is the final number to come from the calculation.
How Can You Use Machine Hourly Rate When Estimating Jobs?
When you estimate your jobs, using a Machine Hourly Rate that's calculated based on each of the different machines needed to make the part will help ensure your job estimates are more accurate. What you need to do is combine the Hourly Rate on a per machine basis with your estimate of how many hours will actually be needed from each machine.
For example, say a part needs 0.75 hours on a mill whose rate is $65/hr and 0.5 hours on a lathe at $55/hr. The machine time for that part costs 0.75 x 65 + 0.5 x 55 = $76.25. Add material, tooling that's specific to the job, setup time, and any outside processing, and you have the basis for your quote.
For more on building a quote, see our guide to machining cost estimation and quoting.
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