QuotedPartAnswers · Updated 2026-10-30
How do I calculate my machine shop's hourly rate?
Price one of your own parts: Drop a STEP model or PDF drawing — about 90 seconds, no account.
Your part priced in about 90 seconds, no account.
Start with the hours you can actually bill, not the hours the machine is powered on. Add the yearly cost of ownership, space, power, upkeep, labor, and overhead; divide by billable hours; then apply the profit margin you want to quote.
See how QuotedPart connects to your workflow with its API, MCP server, autonomous quoting and shop-specific learning.
The formula
A practical formula is: hourly cost = yearly cost ÷ (staffed hours × utilization). Hourly sell rate = hourly cost × (1 + profit percentage). Keep utilization separate from profit: utilization pays for idle, setup, waiting, and maintenance time; profit is what remains after cost.
| Measure | Example |
|---|---|
| Billable hours | 1300 h/year |
| Break-even cost | $114.51/h |
| Sell rate after 15% profit | $131.69/h |
What belongs in yearly cost
The example includes machine ownership and interest, floor space, power, upkeep and tooling, operator wages with burden, and a share of office, quoting, QA, insurance, and software overhead. Replace each example input with your own books or a documented estimate.
- Machine: purchase price, useful life, and the cost of money tied up.
- Labor: wage, payroll burden, benefits, and how many machines one operator covers.
- Overhead: rent, quoting time, QA, software, insurance, and management support.
- Utilization: the share of staffed hours that actually earns a job charge.
Why one shop's number is not another shop's number
A rate is a model of a shop, not a universal market fact. A new machine with low debt and high utilization can have a lower break-even rate than an older machine that needs more maintenance. A shop may still choose a different sell rate for a strategic customer or a difficult tolerance, but the underlying cost should remain visible.
- Review the rate when machine costs, wages, rent, or utilization change.
- Use separate rates when machines or operator coverage are genuinely different.
- Compare the rate to actual job margins after the fact and correct the inputs, not just the markup.
Example inputs
- • machinePrice: 150000
- • years: 7
- • interestPct: 7
- • floorSqFt: 250
- • rentPerSqFt: 12
- • powerKw: 12
- • pricePerKwh: 0.14
- • upkeepPerYear: 9000
- • wagePerHour: 30
- • burdenPct: 30
- • machinesPerOperator: 1
- • overheadPerYear: 30000
- • hoursPerYear: 2000
- • utilizationPct: 65
- • profitPct: 15
| Measure | Value |
|---|---|
| Billable hours | 1300 h/year |
| Break-even | $114.51/h |
| Sell rate | $131.69/h |
Sources and limits
Claims are dated where they can change. Product calculations are examples from the stated inputs, not a promise about a customer's quote. Competitor wording is attributed to the source shown.
- The worked values come from QuotedPart's hourlyRate helper and its clearly stated example inputs.
Questions
Should profit be included in the hourly cost?
Keep profit separate. Divide yearly cost by billable hours for break-even, then apply the chosen profit margin to get the sell rate.
Should every machine have the same rate?
Not if they cost different amounts to own and run. A 5-axis mill, a Swiss lathe and a manual mill have different purchase prices, tooling, power and operator coverage. Many small shops start with one blended rate and split it into two or three rates once they see jobs on the expensive machine losing money.
How often should I recalculate my rate?
Once a year, and whenever something big changes: a new machine, a new lease, a wage increase, or a big change in how busy the shop is. Compare the rate to what finished jobs actually earned and fix the inputs that were wrong.
What utilization should a shop use?
Use a documented estimate of the share of staffed hours that can be billed. Include setup, waiting, maintenance, and idle time in the unbilled share rather than hiding it in profit.
Price one of your own parts
Drop a PDF drawing or a STEP file. QuotedPart reads the print, measures the model and prices it in seconds, on default shop rates you can change.
Your STEP file or PDF drawingDrop a PDF drawing, a STEP file or both
Free. No account, no email. Priced at our default US rates until you set yours.
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