Cost Per Hour Calculator
Back to ResourcesHow to use the cost-per-hour calculator
Enter your working capacity and costs
Start with the shop’s working calendar, then enter fixed operating costs and the details for each workcentre. Include staffing and labour rates, together with relevant finance, consumables and maintenance costs. Use annual amounts where the fields request annual costs. Avoid counting the same expense in both a workcentre’s direct costs and the shop’s shared overheads.
Understand the calculation
The calculator applies an 80% practical capacity factor to available hours. For a machine-based workcentre, productive hours are limited by the lower of its machine capacity and labour capacity. For a labour-based workcentre, productive hours follow labour capacity. Shared fixed costs are allocated in proportion to workcentre labour hours. The hourly cost is the sum of labour cost, direct costs and allocated fixed costs, divided by productive hours.
Interpret the result carefully
The result is a cost rate, not a customer selling price. It does not choose your profit margin or account for every job-specific commercial risk. Check your assumptions against the way your shop actually operates, especially where several machines share an operator or specialist labour limits output. A zero-capacity entry cannot provide a meaningful hourly rate; complete the relevant capacity inputs before using the result.
Keep your estimates current
Review rates when wages, staffing, equipment or overheads change. Compare workcentres using the same costing period and test realistic alternatives before adopting a new rate. Use the result alongside operation times, material requirements and subcontract costs when preparing a job estimate.