Equipment Total Cost of Ownership Calculator

1. Enter purchase price, cash down and the loan rate and term.
2. Set how long you'll own the machine, its expected resale value and operating hours per year.
3. Add fuel burn and price, maintenance, insurance, taxes and storage to see total, annual and per-hour cost.

Quick answers

What goes into heavy equipment total cost of ownership?

Depreciation (price minus resale), financing interest, the return your cash could have earned, fuel, maintenance and repairs, insurance, taxes and storage — all covered here.

Edge cases and limits

• Resale value has the biggest single effect on depreciation; use recent sale prices for the same model and hours.
• To decide whether to own at all, compare with the Equipment Rent vs Buy Calculator.

Ownership costs are paid whether or not the machine runs; operating costs scale with hours. Separating them shows how much of the hourly cost comes from utilization. Financing counts only the interest paid while you own the machine, and cash you put down is charged the return it could have earned elsewhere.

• Depreciation = purchase price − resale value
• Interest = interest paid on (price − cash down) during ownership
• Opportunity cost = cash down × return rate × years
• Fuel = hours per year × years × gal/hr × fuel price
• Total = depreciation + interest + opportunity + fuel + (maintenance + insurance + taxes + storage) × years
• Cost per hour = total ÷ (hours per year × years)

The cost per operating hour is what the machine must earn — or save — every hour it runs to pay for itself. When the fixed ownership share is large, utilization is the lever: more hours or renting will change the answer more than fuel or repairs.

Common mistakes and assumptions

• Overestimating annual hours; use hour-meter records where possible.
• Ignoring the cost of cash on an outright purchase.
• Leaving repairs flat for older machines — they rise with age.
• Adding operator wages here and again in the job price.

A $120,000 compact excavator with $20,000 down, financed at 7.5% over 5 years, run 800 hours a year for 7 years and sold for $45,000.

1. 1Depreciation = $120,000 − $45,000 = $75,000.
2. 2Interest on $100,000 over the 5-year loan ≈ $20,230; opportunity cost on $20,000 at 4% for 7 years = $5,600.
3. 3Fuel = 5,600 hours × 4 gal × $3.80 = $85,120. Maintenance, insurance, taxes and storage = $10,500 × 7 = $73,500.
4. 4Total ≈ $259,450 over 5,600 hours ≈ $46 per operating hour.

What is heavy equipment total cost of ownership?

It is everything a machine costs over the years you own it: depreciation, financing or the cost of cash, insurance, taxes, storage, fuel, and maintenance and repairs, minus nothing — resale is already netted into depreciation.

How is this different from the Equipment Cost per Hour Calculator?

The cost per hour calculator focuses on an hourly rate from annual figures. This calculator follows the whole ownership period, including loan interest actually paid and the opportunity cost of cash, and totals the lifetime cost.

Should I include my operator's wage?

Not here. This is the cost of the machine. Add labor separately — the Labor Burden Calculator gives a loaded hourly labor cost — when you price a job.

How do I compare owning vs renting?

Compare the cost per hour here with the rental rate per hour at your expected usage. Low annual hours usually favor renting because fixed ownership costs are spread across fewer hours.

Why include opportunity cost on a cash purchase?

Cash used to buy equipment cannot earn a return or pay down other debt. Charging it a reasonable rate puts a cash purchase and a financed purchase on a comparable basis.