Machine Shop Hourly Rate Calculator
Work out what each machine actually costs per hour — machine payment, burdened labor, floor space, tooling, and its share of overhead — spread over the hours you really bill, not the hours the lights are on. Then see how far a single blended shop rate drifts from each machine's true rate.
The numbers below are an example shop, not benchmarks. Replace them with your own — results update as you type. Nothing leaves this page.
Work centers
| Input | ||||
|---|---|---|---|---|
| Machine cost as | ||||
| Machine price ($) | ||||
| Years to recoverHow fast it must pay for itself | ||||
| Monthly payment ($)Loan or lease | ||||
| Floor space + utilities ($/mo)This machine's share | ||||
| Maintenance + tooling ($/yr) | ||||
| Operator wage ($/hr) | ||||
| Labor burden (%)Payroll tax, insurance, benefits | ||||
| Operator share1 = dedicated, 0.5 = runs two machines | ||||
| Share of shop overhead (%)All columns should total 100 | ||||
| Scheduled hours / week | ||||
| Realistic utilization (%)Hours actually billed ÷ scheduled |
Your rates
Blended shop rate (break-even $112.63/hr)
Annual cost to recover over 5,000 billable hours
| Work center | Annual cost | Break-even /hr | Recommended /hr | If 100% utilized | Blended vs this machine |
|---|---|---|---|---|---|
| Saw | $46,943 | $46.94 | $53.98 | $26.99$27/hr short · $26,992/yr | +$75.54/hrovercharged $75,539/yr |
| VMC | $148,343 | $114.11 | $131.23 | $85.30$46/hr short · $59,708/yr | −$1.70/hrundercharged $2,215/yr |
| 5-axis | $233,200 | $179.38 | $206.29 | $134.09$72/hr short · $93,863/yr | −$76.77/hrundercharged $99,800/yr |
| CNC lathe | $134,657 | $96.18 | $110.61 | $77.43$33/hr short · $46,457/yr | +$18.91/hrovercharged $26,476/yr |
Quoting everything at the blended $129.52/hr, the 5-axis brings in about $99,800 a year less than it costs at your target markup — and the cheaper machines win work you could have priced lower.
Why blended rates underprice expensive machines
A blended rate is total shop cost divided by total billable hours. That's a fine number for a P&L, but a poor one for quoting, because your machines don't cost the same to own. A five-axis machine carries a larger payment, more floor space, pricier tooling, and usually a higher-paid operator than a saw. Quote both at the blended rate and every five-axis hour sells below cost while every saw hour sells above it.
The damage compounds: competitors with per-machine rates beat you on the simple sawing and turning work, and you win the complex multi-axis jobs — the ones you're losing money on. The utilization mistake stacks on top of it. Divide by 100% of scheduled hours and every rate comes out too low by the same ratio as your idle time.
Per-work-center rates in every quote — being built into Traveler.
Traveler is pre-launch quote-to-invoice software for small machine shops. We're building it so the rates you set here live on each work center and price every routed op automatically, and job costing shows whether the hours you quoted are the hours it took. Leave an email for early access.
Straight answers
▸How do you calculate a machine shop hourly rate?
Per work center, add up a year of costs: machine cost recovery (purchase price over the years it must pay for itself, or the monthly payment), its share of floor space and utilities, maintenance and tooling, the operator's wages plus burden, and its share of shop overhead. Divide by the hours you realistically bill — scheduled hours times utilization — to get break-even, then add your profit markup.
▸Why not divide by every hour the shop is open?
Because you don't bill every hour. Setups that run long, waiting on material, programming, maintenance, and slow weeks all eat scheduled time. A rate built on 100% utilization only recovers your costs if every scheduled hour is sold; at 65% utilization, the same costs need a rate about 1.5 times higher.
▸Should I use one shop rate or a rate per machine?
Per machine (work center). A blended rate averages a five-axis machine's payment and tooling with a saw's, so five-axis time is quoted below cost and saw time above it. You lose money on complex work and lose bids on simple work at the same time.
▸What utilization should I assume?
Use your own clock or job-costing data if you have it: hours billed to jobs divided by hours the machine was scheduled. Without data, the calculator's example uses 65–70% for CNC machines, which is an example starting point, not a benchmark — test how sensitive your rate is by changing it.