CNC machine hour rate calculator
Machine hour rate = yearly depreciation, floor space, and tooling and maintenance divided by billable hours, plus electricity and operator cost per billable hour. Electricity comes pre-filled from official data: US industrial average 9.64 ¢/kWh (EIA, August 2026), UK small business 28.59 p/kWh (DESNZ, Q2 2026), Dubai industrial 23 fils/kWh. Change any number to match your shop.
The formula
The machine hour rate method spreads every cost of owning and running a machine over the hours it works [5]. This calculator splits it into five parts, so you can see which one drives your rate.
Billable hours = hours open per year × utilisation
Depreciation = machine price ÷ life in years ÷ billable hours
Floor space = floor space cost per year ÷ billable hours
Tooling and maintenance = machine price × % per year ÷ billable hours
Electricity = average kW drawn × price per kWh
Operator = operator cost per hour ÷ utilisation
Machine hour rate = the five parts added together
The operator is paid for every open hour, billable or not, which is why that cost is divided by utilisation. Electricity is counted only while the machine runs. Depreciation is straight-line with no resale value; add interest on the money tied up in the machine if you financed it.
Worked example
The machine inputs are an example, not a benchmark. The electricity price is the US industrial average for August 2026, 9.64 ¢/kWh [1].
| Part | Working | Per billable hour |
|---|---|---|
| Billable hours | 4,000 h × 75% | 3,000 h |
| Depreciation | $150,000.00 ÷ 10 years ÷ 3,000 h | $5.00 |
| Floor space | $12,000.00 ÷ 3,000 h | $4.00 |
| Tooling and maintenance | $150,000.00 × 8% ÷ 3,000 h | $4.00 |
| Electricity | 10 kW × 9.64 ¢/kWh | $0.96 |
| Operator | $30.00 ÷ 75% | $40.00 |
| Machine hour rate | Sum of the five parts | $53.96 |
In this example electricity is 1.8% of the rate and the operator 74%. Raising utilisation from 75% to 85% lowers the rate to $47.73, because every fixed cost and the operator are spread over more billable hours.
Electricity prices in the calculator
United States, by state (cents/kWh)
Average price to industrial and commercial customers, from EIA's Electric Power Monthly [1]. August 2026 is preliminary; August 2025 is final. Lowest industrial price among the states: New Mexico, 5.08 ¢; highest: Hawaii, 39.33 ¢.
| State | Industrial, Aug 2026 | Industrial, Aug 2025 | Commercial, Aug 2026 |
|---|---|---|---|
| Alabama | 8.11 | 7.76 | 14.98 |
| Alaska | 23.13 | 20.49 | 23.90 |
| Arizona | 9.73 | 8.88 | 13.05 |
| Arkansas | 7.85 | 7.32 | 11.73 |
| California | 24.12 | 23.84 | 30.02 |
| Colorado | 9.98 | 9.64 | 13.94 |
| Connecticut | 16.18 | 18.91 | 19.29 |
| Delaware | 10.40 | 9.86 | 14.50 |
| District of Columbia | 18.53 | 8.10 | 23.31 |
| Florida | 8.93 | 9.01 | 11.35 |
| Georgia | 13.05 | 8.20 | 13.81 |
| Hawaii | 39.33 | 30.37 | 43.55 |
| Idaho | 9.71 | 8.66 | 10.21 |
| Illinois | 11.33 | 10.18 | 14.67 |
| Indiana | 9.28 | 8.98 | 13.29 |
| Iowa | 9.31 | 8.94 | 14.15 |
| Kansas | 8.49 | 8.22 | 12.24 |
| Kentucky | 7.37 | 7.01 | 12.09 |
| Louisiana | 6.10 | 6.29 | 11.09 |
| Maine | 14.24 | 15.27 | 21.33 |
| Maryland | 12.19 | 11.37 | 17.00 |
| Massachusetts | 20.03 | 19.17 | 24.11 |
| Michigan | 8.99 | 8.40 | 16.21 |
| Minnesota | 9.96 | 9.47 | 13.41 |
| Mississippi | 7.57 | 7.38 | 13.45 |
| Missouri | 9.89 | 9.38 | 12.63 |
| Montana | 7.97 | 7.45 | 13.64 |
| Nebraska | 8.37 | 8.70 | 10.00 |
| Nevada | 10.20 | 9.69 | 9.80 |
| New Hampshire | 17.26 | 16.95 | 20.99 |
| New Jersey | 16.24 | 15.06 | 18.71 |
| New Mexico | 5.08 | 6.37 | 12.14 |
| New York | 10.54 | 10.20 | 23.06 |
| North Carolina | 8.23 | 7.80 | 10.73 |
| North Dakota | 8.12 | 7.62 | 8.07 |
| Ohio | 9.75 | 8.47 | 12.31 |
| Oklahoma | 8.16 | 6.64 | 10.90 |
| Oregon | 8.75 | 8.44 | 10.72 |
| Pennsylvania | 10.47 | 9.66 | 13.93 |
| Rhode Island | 19.87 | 19.84 | 23.31 |
| South Carolina | 7.88 | 7.21 | 11.76 |
| South Dakota | 9.43 | 8.67 | 11.71 |
| Tennessee | 6.92 | 6.85 | 13.13 |
| Texas | 7.21 | 6.42 | 8.96 |
| Utah | 8.56 | 9.30 | 10.39 |
| Vermont | 12.72 | 12.05 | 20.47 |
| Virginia | 9.98 | 9.40 | 11.14 |
| Washington | 7.43 | 7.06 | 11.81 |
| West Virginia | 8.34 | 8.23 | 11.65 |
| Wisconsin | 10.88 | 9.58 | 14.19 |
| Wyoming | 8.80 | 8.69 | 10.27 |
| U.S. Total | 9.64 | 8.98 | 14.47 |
EIA notes that utilities may classify commercial and industrial customers by NAICS code or by demand and usage, so a small job shop can be billed on a commercial rate. Use the column that matches your bill [1].
United Kingdom, by consumption band (pence/kWh)
Average price paid by non-domestic consumers, Q2 2026 (provisional), excluding VAT [2]. The band is your site's yearly electricity use: a shop using 20 to 499 MWh a year is "Small".
| Band | Annual use | Incl. Climate Change Levy | Excl. CCL |
|---|---|---|---|
| Very small | 0-20 MWh | 38.36 | 37.67 |
| Small | 20-499 MWh | 28.59 | 27.87 |
| Small/medium | 500-1,999 MWh | 27.67 | 27.09 |
| Medium | 2,000-19,999 MWh | 25.17 | 24.61 |
| Large | 20,000-69,999 MWh | 24.42 | 23.85 |
| Very large | 70,000-150,000 MWh | 22.70 | 22.25 |
| Extra large | over 150,000 MWh | 22.25 | 21.78 |
UAE (Dubai)
Dubai's industrial tariff is set by Executive Council Resolution No. 16 of 2011, by monthly consumption [3]. DEWA adds a fuel surcharge that it sets each month; we could not read it from DEWA's site, so add it from your bill. Abu Dhabi (ADDC) tariffs are not shown because we could not read the current official schedule: type your own price.
Sources and last checked
| # | Source | What we took from it | Checked |
|---|---|---|---|
| 1 | U.S. EIA: Electric Power Monthly, Table 5.6.A, average price of electricity by state | Industrial and commercial price by state in cents/kWh, August 2026 (preliminary) and August 2025 (final), and the note on how utilities classify commercial and industrial customers. Source data: Form EIA-861M. | 2 Nov 2026 |
| 2 | DESNZ: Gas and electricity prices in the non-domestic sector (tables 3.4.1 and 3.4.2) | UK electricity price by consumption band, Q2 2026 (provisional), pence/kWh, with and without the Climate Change Levy, excluding VAT; band limits in MWh a year. Published 29 Sep 2026, next update 17 Dec 2026. | 2 Nov 2026 |
| 3 | Dubai Executive Council Resolution No. (16) of 2011, electricity and water tariff (Dubai Legislation Portal) | Industrial electricity tariff: 23 fils/kWh from 1 to 10,000 kWh a month, 38 fils/kWh above; DEWA may add a monthly fuel surcharge (Article 2). | 2 Nov 2026 |
| 4 | DEWA: Slab tariff and monthly fuel surchargeDEWA's site refused our scripted requests on 2 Nov 2026, so the current fuel surcharge is not pre-filled. Add it from your bill. | Where DEWA publishes the current fuel surcharge (set each month). | 2 Nov 2026 |
| 5 | ICAI study material: Overheads, machine hour rate method (PDF) | The machine hour rate method: machine-related costs per year divided by the machine's working hours. | 2 Nov 2026 |
Found a newer official price? Email it and we update the page.
Still quoting jobs from a spreadsheet like this? Krira Digital turns it into an online quoting tool.
Questions
How do you calculate a CNC machine hour rate?
Add the machine's yearly costs (depreciation, floor space, tooling and maintenance), divide by the billable hours a year, then add electricity and operator cost per billable hour. Billable hours are the hours the shop is open times utilisation.
What is the machine hour rate formula?
Machine hour rate = (machine price ÷ life + floor space per year + tooling and maintenance per year) ÷ billable hours + average kW × price per kWh + operator cost per hour ÷ utilisation.
What is the average industrial electricity price in the US?
9.64 cents per kWh in August 2026 (EIA, preliminary), against 8.98 cents in August 2025. Among the states, New Mexico was lowest at 5.08 cents and Hawaii highest at 39.33 cents.
Should I use the industrial or the commercial electricity price?
The one on your bill. EIA notes that utilities may classify commercial and industrial customers by NAICS code or by demand and usage, so a small machine shop can be on a commercial rate. The US average commercial price was 14.47 cents per kWh in August 2026.
What electricity price do UK small businesses pay?
DESNZ reports 28.59 p/kWh including the Climate Change Levy and excluding VAT for the "Small" band (20 to 499 MWh a year) in Q2 2026, provisional. Very small users (under 20 MWh a year) paid 38.36 p/kWh.
What is the industrial electricity tariff in Dubai?
23 fils per kWh for the first 10,000 kWh a month and 38 fils above that, under Executive Council Resolution No. 16 of 2011. DEWA adds a fuel surcharge that it sets each month.
Should I use the nameplate kW of the spindle?
No. The nameplate is the maximum. Use the average power the machine draws while running, measured with a power meter or estimated from your bills.
Does the machine hour rate include profit?
No. It is the cost of running the machine. Add your overheads (office, insurance, finance, sales) and your margin before quoting a shop rate.
Tell us what you need.
Website, catalogue, software or app. Message us and we reply within one working day.
Tap one. Your message is already written: just press send.