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How do you calculate a machine shop hourly rate?
A machine shop hourly rate is a machine's yearly cost of ownership, plus the operator's burdened wage for every scheduled hour, plus its share of shop overhead, divided by the hours you actually bill. Add margin on top for the quote rate. Utilization moves the result most: a machine billed 50% of the time costs half again as much per hour as one billed 75%.
What does an hour on your machine cost?
Pick the closest machine, then put in your own numbers. Everything recalculates as you type, and nothing leaves your browser.
Start from
Taxes, benefits, PTO
Rent, office, QC, software
- Break-even rate
$89/h$89/h - Quote rate at 15% margin
$105/h$105/h - Billable hours a year
1,5001,500
- Machine
- $18.67
- Operator
- $50.40
- Overhead
- $20.00
Break-even rate by utilization
Ten points less utilization adds $13.70 to every hour. The machine, the operator and the overhead cost $133,600 a year whether an hour is billed or not, so filling hours moves the rate more than any other input.
What goes into a shop rate?
Three buckets, each divided by billable hours, not hours the building is open.
- Machine cost of ownership
- Purchase and installation spread over useful life, plus maintenance, tooling holders, floor space, power and air. A paid-off machine still has maintenance and space.
- Operator
- Wage plus payroll burden: payroll taxes, insurance, benefits and paid time off, commonly 25–40% on top of wage. Paid for every scheduled hour, billed or not. One operator running two machines halves it per machine.
- Overhead
- Everything that isn't on the machine: rent, office staff, quality and inspection, programming, software, insurance, utilities for the building. Allocate it by floor space or by hours.
- Billable hours
- Scheduled hours times utilization. One shift is about 2,000 hours a year. Utilization is the share you can put on an invoice.
- Margin
- Profit on top of break-even, as a share of the price. 15% margin means the quote rate is break-even divided by 0.85, not times 1.15.
Where do shop rates usually go wrong?
The errors that make a shop busy and broke at the same time.
MistakeWhat happensFix
Dividing by available hours
What happensThe rate assumes a 100% booked machine, so every hour of idle time is unpaid.
FixDivide by billed hours from last year's invoices.
One rate for every machine
What happensOld machines are overpriced, new ones underpriced. You win the wrong work.
FixRate each machine group on its own cost.
Leaving out burden
What happensWage alone misses 25–40% of what an operator costs.
FixUse loaded labor from payroll, not the hourly wage.
Margin as markup
What happensAdding 15% to cost yields 13% margin, not 15%.
FixDivide cost by one minus the margin.
Matching a competitor's rate
What happensTheir cost, utilization and machines aren't yours.
FixKnow your break-even. Then decide where to price.
Questions about shop rates
What is a typical CNC machine shop rate?
US job shops commonly bill roughly $75–$150 an hour for 3-axis milling and turning, and more for 5-axis, Swiss and large-envelope work. The right number is your own: the calculator above shows what yours has to be to cover cost at your utilization.
Should I charge one shop rate or a rate per machine?
A rate per machine group. One blended rate overprices work on paid-off manual equipment and underprices work on a new 5-axis, so you win the jobs you lose money on and lose the ones you'd profit from.
What utilization should I plan on?
Plan on what you bill, not what the spindle could run. Many shops target 70–80% of scheduled hours billed. Setup, waiting for material and first-article time that you can't bill all count against it.
Is setup time included in the hourly rate?
No. Quote setup as its own line, hours times the rate, and spread it over the run quantity. That is why price per part drops as quantity rises, and why a buyer should see the price breaks.
How often should I update my shop rate?
Once a year, and whenever wages, rent or a major machine change. Check actual billed hours against the plan each quarter; a utilization drop is the first sign your rate is too low.
Get RFQs matched to your shop
Apply with your processes, materials, certifications and open capacity. SSG routes matching RFQs to you with drawings and a DFM check attached, and is paid only as commission on orders you invoice.