Machine Hour Rate — Costing Guide
1 · Anatomy of the hourly rate
The machine-hour rate splits into a fixed block (incurred whether the spindle turns or not) and a variable block (incurred per running hour):
fixed/yr = (price − residual)/life + (price + residual)/2 · i + space·m²·rate + maintenance + tooling + other
machine €/h = fixed/yr ÷ operating hours + power·duty·tariff · total rate = (machine + labor)·(1 + overhead)
Imputed interest uses the average capital employed (price + residual)/2 — the money tied up in the machine has an opportunity cost whether or not a bank financed it. Depreciation is linear to residual, the standard management-accounting convention; tax depreciation differs deliberately and belongs in the tax books, not the quote.
2 · Why utilization dominates
Every fixed euro is diluted by the operating hours. At 1 500 h/yr the fixed block of the default example costs ≈ 35 €/h; at 4 500 h/yr the same block costs ≈ 12 €/h — a 23 €/h swing on the quote from a scheduling decision, not an engineering one. This is why the sensitivity chart matters more than any single line item: the cheapest machine is a busy one. Use real spindle-on / arc-on hours, not shift attendance — presence time overstates utilization by 30–50 % on typical shops and prices work you then cannot deliver at margin.
3 · Common costing mistakes
Using purchase price only: tooling, installation, foundation and commissioning are 10–25 % on top and belong in the capital base. Forgetting imputed interest: financed or not, capital is never free. Nominal instead of duty-factored power: a 15 kW nameplate rarely draws 15 kW continuously; 50–70 % duty is typical for machining. Zero maintenance budgeting: 4–8 % of replacement value per year is the honest band for CNC equipment. Charging shift hours: see above — the single most expensive lie in job costing.
4 · Worked example (defaults)
€250 k machining center, €25 k residual, 10 yr, 3 500 h/yr, 6 % interest, 40 m² at €120, 15 kW at 60 % duty and €0.18/kWh, 5 % maintenance, €4 k tooling, €1.5 k other: fixed ≈ €54 050/yr → €15.4/h + energy €1.6/h → machine €17.1/h. Labor €38/h shared over 2 machines → €19/h. With 20 % overhead the total rate ≈ €43.3/h. A 90 s cycle then costs ≈ €1.08 of machine time — the number that decides whether the quote wins and pays.
5 · FAQ
Why is my shop rate higher than a competitor's with the same machine? Usually utilization and space, not the machine. Compare operating hours first, then space allocation, then maintenance budgeting — the capital block is rarely the differentiator.
Should I use replacement value or purchase price? For pricing, replacement value is the defensible modern practice (you must re-buy at tomorrow's price); for book accounting, historical price. The engine takes either — document the choice in the audit trail.
How do I cost a machine shared across product lines? Allocate by real hours consumed per line and keep one audited rate per machine — blended shop-wide rates hide winners and losers in the same average.
What overhead percentage is honest? Whatever your controller can trace: admin, quality, logistics, IT. 15–30 % on machine+labor is typical for job shops; the audit trail makes the choice visible instead of hiding it in a margin guess.
