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CNC Machine Hourly Rate Calculator

Oct 21, 2013   //   by Bob Warfield   //   Blog, Manufacturing, Software  //  14 Comments

Our G-Wizard Estimator software has a Machine Hourly Rate Calculator.   A lot of shops use the notion of hourly rate on machines to help with job cost estimation and quotation, but there’s not a lot of information available about how to calculate a good hourly rate to use.  Here’s what the CNC Machine Hourly Rate Calculator looks like:

CNC Machine Hourly Rate Calculator…

The basic strategy is to determine the machine’s Total Cost of Ownership (TCO) over its useful life and then divide that by how many hours it will be used.

Let’s go over each piece of data that must be entered:

–   Purchase Price:    This is the price to purchase the machine and its basic tooling.  For example, a mill will probably need a vise and a few other pieces of basic tooling.  Fixtures used for particular parts should not be included here.

–   Finance:  Check the box if you want to finance the machine.

–   Depost:  The amount you’re putting down on the machine.

–  Loan Term (yrs):  How many years will you finance it for.

–  Annual Interest (%):  What interest rate is the financing?

–  Total Loan Interest Paid:  This just tells you how much loan interest will be added to the Total Cost of Ownership.

–  Useful Life (yrs):  How many years until you’ll be ready to trade-in the machine?

–  Trade-in Value:  What will the value of the machine be when you’re ready to trade it in.  If you wonder, take a look at used machinery prices for similar machines.

–  Annual Consumables Cost:  This is the cost of tooling, lubricants, repairs, spare parts, and whatever else you’d like to include.  Some shops want to bill all the cutters into the consumables cost while others want them as a separate line item by job since tool wear can vary quite a lot from job to job.

–  Operator Rate/Hr:  The hourly rate you’ll need to pay this machine’s operator.

–  Working Hours/Day:  How many hours a day will you run the machine?  8 is the default.  If you have multiple shifts using the machine, it’ll be more.

–  Working Days/Year:  Will you operate the machine every day or some subset?

–  Downtime (%):  Budget some percentage of time the machine will not be in use.  Perhaps due to needing repairs, because work gets slow, or some other reason.

–  Total Cost of Ownership:  This factors in all of the above costs to give you a Total Cost of Ownership

–  Markup (%):  Some shops will want to apply a profit margin directly to the hourly rate of each machine.  Others will keep it as a separate line item.  You can do either by entering a value here or leaving it as 0%.

–  Hourly Cost w/ Labor:  This is the final number to come from the calculation.

The numbers in the example were for a Haas Mini Mill that I just took the information of their web site for.

You can find the Machine Hourly Rate Calculator on the Machine Profile under the Setup Basics tab.  Each machine has an Hourly Rate field.  Next to the field is a Calculate button that brings up this calculator:

CNC Machine Hourly Rate

Press the “Calculate” button to figure out the machine’s hourly rate…

 

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14 Comments

  • How hard would it be to add energy costs into the calculation?

    • csutton, I think the easiest thing to do there is treat energy cost as part of the consumables allowance. The problem with trying to do anything fancier is the machine’s energy needs are going to vary as it is being used. If you’ve got a 20HP VMC, it’ll use a lot less depending on the HP it is running for a particular op.

      This would be a good one to do as an allocation of an overhead expense. Figure all your shop overhead (electricity, heat, water, rent, etc.), and then allocate it out to the machines as part of consumables. Assign the overhead cost pro-rata to the machines in some way that makes sense for your business. Spindle HP would be one quick and easy way to do it as it is roughly proportional to a lot of the contributing overhead factors.

  • I would like to try this program but cant find it.
    Thank you Bob for all the great work.
    Scott

  • Scott, thanks for writing. Just download the free trial of G-Wizard Calculator. CADCAM Estimator is built-in to Calculator for the time being. Use our “Software” menu at top of page to find the Calculator.

  • Bob, I tried this program with an inexpensive mill and was shocked just how low it cost to run.
    I have a new machine coming before years end and want to calculate a shop rate for it. Since I have upgraded to V2.19 I cant find where the function is located again. Can you help me out again?
    Thank you,
    Scott

  • Scott under Setup at the bottom of the Machine Profile. See the pic above for the exact spot on that popup.

  • Sorry website still in progress. We are a company ALN Engineering in Santa Ana, CA. Have a great setup, and machinist. Need help with pricing. Is there a simple or otherwise formula I can use to determine cost of a job. I have someone at the moment, but they will be leaving me soon. HELP!!!!

    • Herb, there are no super simple formulas–you need to go through an estimation process such as the one our G-Wizard Estimator offers. You can do it via pencil and paper or via software. The latter will be a more efficient use of your time.

      • Thank you your quick response. I check out the G-Wizard Estimator.

  • Where’s the machine hourly rate calculator on the mac software? (it’s not in the basic setup window like in the pic). or what do I have to do in order to make it available i’ve just downloaded the software, thank you!

  • […] CNC Machine Hourly Rate Calculator […]

  • Hi. I’ve just started a trial subscription. Can i access the ‘CNC machine hourly rate calculator’? or do i need a full/paid subscription to access?

    Thanks

    • Ben, you can access the hourly rate calculator in G-Wizard Estimator. While it is in Beta Test, you will need to have an Estimator Trial and either a Calculator Trial or Subscription.

      Best,

      BW

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