What is equipment hourly cost?
Equipment hourly cost is what you spend on a machine in a year divided by the hours it works. It has two parts: owning costs you pay even when the machine stands still, such as depreciation, cost of capital and insurance, and operating costs that rise with use, such as fuel and maintenance, plus the operator.
The calculator divides the annual cost twice: by engine hours as the hour meter records them, and by the productive hours in which the machine actually worked. The gap between the two figures is the cost of idling.
Why cost per productive hour, not per engine hour?
- The hour meter cannot tell work from waiting: an hour with the engine running while the excavator waits for a truck counts the same as an hour of digging.
- Pricing is based on work: hire contracts and projects pay for working hours, so you need your cost in the same unit.
- Idling wears the machine: idle hours bring the next service closer and burn fuel with nothing produced.
- Comparing machines: a machine that is cheaper per metered hour can cost more per productive hour if it idles more.
What inputs do you need?
| Input | Where to find it | Tip |
|---|---|---|
| Purchase price, resale value and years of use | Purchase invoice, asset register, resale offers for similar machines | Be conservative on resale value, and check it with the Vehicle Depreciation Calculator. |
| Engine hours per year | Hour meter, tracking system reports | Use a full year so peak and slow seasons are both included. |
| Idle share | Engine data or work-status sensors in the tracking system | If you have none, observe the machine for a week and log waiting time with the engine on. |
| Fuel use working and idling | Fill-up records, fuel sensor, engine data | Divide fuel filled by the hours in the same period. |
| Maintenance per hour | Work orders, parts invoices, tires or tracks | Add up a year of spend and divide by engine hours in the same year. |
| Operator cost | Payroll, the Driver Cost Calculator | Enter the full cost, not basic salary alone. |
How is equipment hourly cost calculated?
Hours
Annual owning costs
Depreciation is straight-line over the years of use. Cost of capital is charged on the machine's average value over its life, because the money tied up in it falls every year.
Annual operating costs
Hourly cost and idle cost
Idle cost here is what is spent during idling itself: fuel, wear measured in engine hours, and paid operator time. It leaves out owning costs because they are paid either way.
Cutting idling and break-even
Every input is your own figure; the calculator uses no outside factors or prices. The defaults are examples for you to replace.
Worked example: an excavator running 2,000 engine hours a year
The defaults are examples in US dollars; replace them with your machine's figures: purchase price 160,000, resale value after 7 years 40,000, cost of capital 6% and 30% of engine hours spent idling.
- Owning: depreciation (160,000 − 40,000) ÷ 7 = 17,143, cost of capital (160,000 + 40,000) ÷ 2 × 6% = 6,000, insurance 3,200 and other fixed costs 1,600. Total $27,943 a year.
- Hours: 2,000 engine hours, of which 600 idle and 1,400 productive.
- Fuel: 1,400 × 18 = 25,200 L working and 600 × 4 = 2,400 L idling. Total 27,600 L × 0.44 = 12,144.
- Maintenance: 2,000 × 8 = 16,000. Operator: 1,600 × 12 = 19,200. Annual cost: $75,287.
- Cost per engine hour $37.64 and per productive hour $53.78: idling adds $16.13 to every working hour.
- Direct idle cost $11,616 a year: fuel 1,056, maintenance 4,800 and operator time 5,760.
- Cutting idling to 15% does the same work in 1,647 engine hours instead of 2,000, saving 1,412 L and $3,445 a year; cost per productive hour falls to $51.32.
- At a hire rate of $64 per productive hour the margin is $10.22 per hour and $14,313 a year, and break-even is 1,074 productive hours a year.
How to read your results
- Cost per productive hour is the floor for the hourly rate in a hire quote or a project charge-out.
- The gap between engine-hour and productive-hour cost is the price of idling in every working hour. The bigger the gap, the more cutting idle time is worth.
- The cost split shows your strongest lever. If owning dominates, run the machine more hours or sell surplus machines; check this with the Fleet Vehicle Utilization Calculator. If fuel and maintenance dominate, start with idling and operating practice.
- Break-even tells you how many working hours cover your costs at your rate. If it is close to your actual hours, any extra downtime turns the machine into a loss.
How to lower equipment hourly cost
- Cut idling: switch engines off during long waits, time truck arrivals with the excavator and loader, and track idle share by machine and by operator.
- Tie maintenance to engine hours: servicing by hours prevents major failures. Plan it in the Fleet Maintenance Planner.
- Inspect before every shift: a small defect found early costs less than a breakdown on site. Use the Heavy Equipment Daily Inspection checklist.
- Watch fuel per hour: higher use with no extra work points to idling, a fault or a leak. Track it with the Fleet Fuel Cost Calculator.
Assumptions and limits
Results are estimates based on the values entered, and every default is an example, not a market price. The tool costs one machine and assumes the operator is assigned to it all year and that maintenance scales with engine hours. Depreciation is straight-line over years, so it does not change when engine hours fall; if you depreciate by hours, the real saving is larger. The calculator does not include moving the machine between sites, taxes, or the cost of a stalled project when the machine breaks down. Inspection and registration rules for lifting equipment differ by authority, so check your authority's current requirement.