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Machine shop hourly rate calculator
A machine's hourly rate is what it costs you for a year (payments, space, power, upkeep, the operator and its share of overhead) divided by the hours you actually bill, plus profit. Put in your own numbers and see the rate, and how much it moves when the machine sits idle.
Hourly rate for this machine
$131.69 / hour
Break-even $114.51 / hour, over 1,300 billed hours a year
| Cost | A year | Per billed hour |
|---|---|---|
| Machine payments and interest | $26,679 | $20.52 |
| Floor space | $3,000 | $2.31 |
| Power | $2,184 | $1.68 |
| Service, coolant and tooling | $9,000 | $6.92 |
| Operator, with taxes and benefits | $78,000 | $60.00 |
| Share of shop overhead | $30,000 | $23.08 |
| Total | $148,863 | $114.51 |
The same machine at other billed shares
| Hours billed | Rate needed |
|---|---|
| 40% | $212.78 |
| 50% | $170.61 |
| 65% | $131.69 |
| 80% | $107.36 |
| 90% | $95.64 |
Guide
How to work out a shop rate
A shop rate is one machine's yearly cost divided by its billed hours:
rate = (ownership + space + power + upkeep + operator + overhead) ÷ (staffed hours × share billed) × (1 + profit)
- Ownership. The price with tooling and install, spread over the years you pay it off, plus interest on the money tied up in it. A paid-off machine still has a cost: the one that replaces it.
- Space and power. The floor the machine and its work area take, at your rent per square foot, and the power it draws while it cuts.
- Upkeep. Service contracts, repairs, coolant and the tooling it wears out in a year.
- The operator. Pay for every staffed hour, plus payroll taxes and benefits. If one person runs two machines, each carries half.
- Overhead. Everything that isn't a machine: the office, quoting, QA, software, insurance, the owner's time. Split it across machines by how much each one is used.
- Billed hours. Staffed hours times the share you charge to a job. This is the number most shops overestimate.
Billed hours matter more than the machine price
Most of a machine's cost is there whether it runs or not, so the rate is very sensitive to the share of hours you bill. Check the table next to the result: the same machine needs a much higher rate at 50% than at 80%. If your rate comes out higher than the work will bear, the fix is usually more billed hours (fewer unbillable setups, a second shift, one operator on two machines), not a cheaper machine.
From rate to quote
A quote multiplies each operation's setup and run time by that work center's rate, adds material and outside processing, then markup. The machining cost estimator walks through it for a milled or turned part, the CNC machining time calculator gives the run time, and the CNC quote template puts it in Excel. In QuotedPart each work center keeps its own rate, and each operation on the quote shows its minutes and its work center's rate.
FAQ
Shop rate questions
- What should a machine shop charge per hour?
- Whatever your own costs divided by the hours you really bill come to, plus profit. Two shops with the same machine can need very different rates: a second shift, a cheaper building or an operator who runs two machines each change the answer. Use the calculator above with your numbers, one machine at a time.
- Should every machine have its own rate?
- Yes, if they cost very different amounts to own and run. A 5-axis mill, a Swiss lathe and a manual bench don't cost the same per hour, and one blended rate overprices simple work and underprices hard work. Most shops keep a rate per work center plus lower rates for deburr, inspection and programming.
- What is utilization, and why does it matter so much?
- It's the share of paid hours you can charge to a job. Setups you can't bill, waiting for material, maintenance and quoting time all lower it. The machine and the operator cost the same whether they are billed or not, so the rate has to cover idle hours too: in the example, going from 65% to 50% billed raises the rate by about 30%.
- Is the shop rate the same as the labor rate?
- No. The labor rate is what an hour of a person costs you. The shop (or machine) rate is everything an hour of the machine costs, including the person running it, the machine, the space, power and overhead. Quote machine time at the machine rate and bench work at a bench rate.
- What rates does QuotedPart start with?
- Every new US shop starts with editable example rates: 3-axis VMC $95/h, 5-axis mill $145/h, CNC lathe $90/h, Swiss lathe $110/h, Fiber laser $175/h and Deburr / bench $55/h. They are a starting point to change on day one, not a market survey.
Quote with your rates on every part
Put your rates in once; every STEP file and drawing is priced with them. 14 days free, no card.