Equipment Cost Per Hour Calculator

Machine cost splits into three buckets: ownership (what the machine loses in value and costs to carry), fuel (what it burns while running), and maintenance (what it takes to keep running). Annual costs are spread across annual operating hours.

• Depreciation per hour = (purchase price − resale value) ÷ useful life hours
• Insurance & taxes per hour = annual insurance and taxes ÷ annual operating hours
• Ownership cost per hour = depreciation per hour + insurance & taxes per hour
• Maintenance per hour = annual maintenance ÷ annual operating hours
• Fuel cost per hour = gallons per hour × fuel price per gallon
• Total cost per hour = ownership + maintenance + fuel

Cost per hour splits into ownership (value lost plus insurance and taxes), fuel, and maintenance. Annual costs are divided by the hours you actually run the machine, so utilization drives the rate more than purchase price does.

Common mistakes and assumptions

• Overstating annual operating hours, which makes the hourly rate look cheap.
• Leaving resale value at zero when the machine still has value at the end of its life.
• Reading this as a rental rate; it is your cost, with no operator labor or profit.

A skid steer costs $68,000, is expected to resell for $22,000 after 6,000 hours, and runs 900 hours a year. Insurance and taxes are $1,900 a year, maintenance $4,200, and it burns 2.4 gal/hr at $3.85.

1. 1Depreciation = ($68,000 − $22,000) ÷ 6,000 = $7.6667 per hour.
2. 2Insurance and taxes = $1,900 ÷ 900 = $2.1111 per hour, giving $9.7778 of ownership cost.
3. 3Maintenance = $4,200 ÷ 900 = $4.6667 per hour.
4. 4Fuel = 2.4 × $3.85 = $9.24 per hour.
5. 5Total = $9.7778 + $4.6667 + $9.24 = $23.6845 per hour, or about $189 for an 8-hour day.

Should loan interest be included?

This calculator covers depreciation, carrying costs, maintenance, and fuel. If the machine is financed, add annual interest to the insurance and taxes field to capture the true cost of capital.

Is this the rate I should bill?

No — it is cost. Add overhead and profit to reach a bill rate, and compare that against local rental rates to confirm ownership still makes sense.

What if I do not know resale value?

Look at auction results for the same model at similar hours. A conservative estimate is better than zero; entering zero assumes the machine becomes worthless, which overstates depreciation.

Why does utilization matter so much?

Depreciation, insurance, and taxes accrue whether the machine works or not. Doubling annual hours roughly halves the fixed portion of the hourly rate, which is why idle iron is expensive iron.

Does this cover operator wages?

No. Operator cost is separate — use the Labor Burden Calculator and add that hourly figure to the machine rate for a full crew-hour cost.