CustomPartNet
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August 12, 2026
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Updated August 12, 2026
A quoted rate is only useful if you understand what's built into it. Suppliers that have a clear handle on their own machine and shop costs tend to quote more consistently and hold to their numbers once a job is underway. Browse our supplier network on the right to compare qualified manufacturers, request quotes, and find partners whose pricing structure fits your project.
Whatever the process, most manufacturing quotes come back to a version of the same math: how long will this job take, and what does an hour of shop time actually cost. That second number, the hourly rate, is where a lot of the ambiguity in sourcing lives. Two shops running the same machine can arrive at very different rates depending on how they've paid for their equipment, how they staff it, and how much downtime they build into their planning.
CustomPartNet's Hourly Rate Calculator is built to make that math visible. It calculates a true hourly cost for a machine or a shop activity by working through equipment costs, labor, consumables, downtime, overhead, and indirect expenses, then produces both a flat hourly cost and a fully burdened rate. The widget can be set up two ways: with machine-specific inputs turned on to calculate a machine rate, or with those inputs turned off to calculate a broader shop rate that isn't tied to one piece of equipment.
Before getting into how each side of a transaction uses the calculator, it helps to know what's actually going into the number.
Equipment costs – the purchase price of the machine, its expected resale or salvage value, and how many hours it's expected to run before replacement. Spread across its working life, this becomes a depreciation cost per hour.
Labor – the wage of the person running the equipment, plus payroll taxes and benefits, often referred to as the "loaded" labor cost.
Consumables – tooling, coolant, lubricants, and other items that wear out or get used up during production.
Downtime – time the machine isn't producing parts due to changeovers, maintenance, or scheduling gaps. Downtime doesn't disappear from the cost equation; it just gets spread across fewer billable hours, which pushes the effective rate up.
Overhead – rent, utilities, insurance, and administrative costs that keep the facility running regardless of which machine is producing parts.
Indirect expenses – smaller costs that don't fit neatly into the categories above but still factor into what it costs to keep the doors open.
The calculator's flat hourly cost is essentially the break-even point: what it costs the shop to run that machine or activity for an hour. The fully burdened rate builds in a margin on top, which is closer to what actually shows up on a quote.
If you're the one requesting quotes, the value of this tool isn't in running your own numbers. It's in understanding the shape of the number a supplier hands you.
A quoted hourly rate isn't arbitrary. It reflects a shop's equipment investment, labor structure, and how efficiently they keep machines running. That's useful context when:
Comparing quotes across suppliers. A rate that looks high at first glance might reflect newer, faster equipment with tighter tolerances, while a lower rate might come from a shop running older machines with less overhead. Neither is automatically the better deal, the comparison depends on what the job actually needs.
Evaluating quotes across regions. Labor and overhead costs shift by geography, so a rate difference between a supplier in one state and another isn't necessarily a red flag. Running representative numbers through the calculator gives you a reference point for what's reasonable in a given area.
Spotting a rate that seems disconnected from reality. If a quote comes in well below what the math would suggest is sustainable for the equipment and labor involved, it's worth asking questions before committing, especially on longer production runs where a supplier under financial strain can turn into missed deadlines.
Used this way, the calculator turns a supplier's rate from an opaque line item into something you can reason about.
If you're on the other side of the quote, the calculator is more directly useful: it's a way to make sure your rate actually covers what it costs to run your shop, before you add margin on top.
A few ways suppliers put it to work:
Setting a defensible machine rate. Enter your equipment's purchase price, expected salvage value, and useful life to get an accurate depreciation figure, then layer in consumables and maintenance. This keeps you from underpricing equipment-heavy jobs where tooling and power costs add up fast.
Accounting for realistic utilization, not ideal utilization. It's tempting to divide costs across a full calendar year of hours. In practice, changeovers, maintenance, and gaps between jobs mean a machine is rarely producing revenue for every hour it's on the floor. Building a realistic downtime assumption into the calculation keeps your rate from quietly eating into your margin.
Deciding between a machine rate and a shop rate. A single-machine job shop with fairly uniform equipment might be better served by a blended shop rate. A shop running a mix of high-cost and low-cost equipment often gets more accurate quotes by calculating machine-specific rates and applying the right one to each job.
Checking margin before it's locked into a quote. Comparing the flat hourly cost to the fully burdened rate shows exactly how much cushion is built in. That's a useful sanity check before a rate goes out the door, particularly for a new piece of equipment or an unfamiliar process.
Here's how the math might play out for a shop pricing a CNC mill.
Machine costs
A vertical machining center costs $150,000, with an expected salvage value of $20,000 after 15,000 hours of use.
Depreciation per hour: ($150,000 − $20,000) ÷ 15,000 hours = $8.67/hr
Annual repairs and maintenance run about $4,500, and the machine logs roughly 2,000 hours a year.
Maintenance per hour: $4,500 ÷ 2,000 hours = $2.25/hr
Power, coolant, and cutting tools add another $6.00/hr in consumables.
Machine cost subtotal: $8.67 + $2.25 + $6.00 = $16.92/hr
Labor
The operator's loaded wage, including payroll taxes and benefits, comes to $32.00/hr.
Overhead
The shop's annual rent, utilities, insurance, and administrative costs total $180,000, spread across 6 machines running about 2,000 hours each per year.
Overhead per machine per hour: ($180,000 ÷ 6) ÷ 2,000 hours = $15.00/hr
Flat hourly cost (break-even):
$16.92 (machine) + $32.00 (labor) + $15.00 (overhead) = $63.92/hr
Fully burdened rate:
Applying a 20% margin: $63.92 × 1.20 = $76.70/hr
That $76.70 figure is closer to what a buyer would actually see on a quote. If the shop only achieves 80% utilization on this machine due to changeovers and scheduling gaps, the effective cost per billable hour climbs further, which is exactly why suppliers who plan around realistic uptime tend to quote more sustainable rates than those working off a best-case scenario.
A machine rate is tied to a specific piece of equipment and accounts for that machine's depreciation, consumables, and maintenance. A shop rate is a blended figure that spreads costs across an activity or the facility as a whole, useful when equipment costs are fairly similar across machines or when labor is the dominant cost driver.
A fully burdened rate includes all the direct and indirect costs of running the machine or shop, plus a built-in margin. It's a more complete picture of what a job actually needs to bring in, compared to a flat cost figure that only reflects break-even.
Differences in equipment age and cost, labor rates by region, facility overhead, and how efficiently a shop utilizes its machines all feed into the final number. A newer, faster machine might carry a higher rate but complete a job in less time, which can offset the difference in total job cost.
More than most people expect. Fixed costs like depreciation and overhead don't shrink just because a machine sat idle for changeovers or maintenance. Spreading those same costs across fewer productive hours raises the effective rate, which is why realistic utilization assumptions matter as much as the cost inputs themselves.
No. The underlying logic (equipment or activity costs, labor, overhead, and downtime, divided by billable hours) applies to any process or shop activity where time on equipment or personnel is the basis for pricing, not just CNC machining.
Yes. Running representative numbers for a given process, region, and equipment type gives buyers a reasonable benchmark for what a rate should look like, even without visibility into a specific supplier's books.
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