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Ops Console / Module 05 / Hourly Rate
Find the floor under every quote.
A shop rate pulled from the air quietly bleeds money on every job. This tool builds the rate from the ground up: every annual cost of running a machine and its operator, divided by the hours it truly produces. Below this number, you lose money no matter how busy the floor looks.
The true cost of one productive hour on a machine. It spreads every annual cost of running that machine over the hours it actually produces work.
Before you set or trust a shop rate. Quoting below this number means the job loses money no matter how busy you look.
Enter the yearly costs to keep the machine and operator running, the hours available, and the share of those hours that are truly productive.
Annual costs ($)
Productive time
True cost per hour is total annual cost divided by productive hours. The suggested rate adds your target margin: cost / (1 - margin).
The yearly costs add up to about $100,000: operator $52k, lease $18k, space $6k, power $4k, maintenance $5k, overhead $15k. The machine is staffed for 2,080 hours but only 65% of that is truly productive, so 1,352 billable hours. That makes the true cost roughly $74 per hour. At a 35% margin, the rate to quote is about $114 per hour, not the $60 someone guessed.
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