How do you calculate equipment cost per hour?

Divide the total equipment cost by the number of hours the equipment will be used. This gives you the baseline hourly cost that you need to recover through your project pricing. For example, if you spend $10,000 on equipment and use it for 100 hours, your cost per hour is $100.

How to calculate the cost of equipment?

For owned equipment, include the purchase price, financing costs, insurance, maintenance, fuel, and transportation costs over the equipment's useful life. For rented equipment, use the total rental cost plus any additional operating expenses like fuel or operator costs.

How do you calculate machine cost per hour?

Use the same formula as equipment cost per hour: total machine cost divided by operating hours. For heavy machinery, consider including operator wages, fuel consumption, maintenance schedules, and depreciation to get a comprehensive per-hour cost.

How to charge for equipment usage?

Start with your calculated cost per hour, then add a markup of 15-25% for overhead and profit. Many contractors use daily rates instead of hourly rates to simplify billing. Compare your rates to local rental companies to ensure you're competitive while maintaining profitability.

Equipment Cost per Hour Calculator

Calculate precise hourly costs for construction equipment to bid jobs accurately and maximize profits.

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How Equipment Cost per Hour Calculator Works

This calculator determines the hourly cost of operating construction equipment by dividing the total equipment cost by the number of hours used. Whether you bought a $50,000 excavator or a $5,000 power tool, knowing your exact hourly cost is crucial for accurate job bidding.

Construction contractors use this calculation to ensure they're covering equipment costs in their project bids. It helps you understand what it actually costs to operate your equipment per hour, which is essential for profitability. Many contractors fail to properly account for equipment costs and end up giving away expensive equipment usage for free.

The calculation works for any type of equipment - from heavy machinery like bulldozers and cranes to smaller tools like generators and compressors. You can use actual purchase costs for owned equipment or rental costs for leased equipment to get your baseline hourly rate.

Equipment Cost per Hour Calculator Formula Breakdown

Formula

Equipment cost per hour = Total equipment cost ÷ Number of hours used

Variables Explained

Total equipment costThe total cost associated with the equipment, which could be the purchase price for owned equipment, rental cost for leased equipment, or operational cost for a specific period. For owned equipment, you might include purchase price, financing costs, insurance, and maintenance expenses.
Number of hours usedThe total hours the equipment will be or has been in operation. This is typically measured over the equipment's useful life, a specific project duration, or billing period. Accurate hour tracking is essential for precise cost calculations.

Example Calculation

Given:

Total equipment cost: $5,000
Number of hours used: 40 hrs

Calculation:

Equipment cost per hour = $5,000 ÷ 40 hours = $125.00 per hour

Result:

$125.00 per hour

Explanation

This example shows the hourly cost for a $5,000 piece of equipment (like a generator or compressor) used for 40 hours. At $125 per hour, you'd need to charge at least this rate to your projects to break even on the equipment cost, before adding markup for profit and overhead.

Tips for Using Equipment Cost per Hour Calculator

💡Track equipment hours meticulously using daily timecards or hour meters to ensure accurate calculations and proper job costing.
💡For owned equipment, include all costs of ownership (purchase price, insurance, maintenance, fuel, transportation) rather than just the initial purchase price for more accurate hourly rates.
💡Add a markup of 15-25% to your calculated hourly rate to account for overhead expenses and generate profit on your equipment investment.

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