Equipment Cost Calculator Formula

Understand the math behind the equipment cost calculator. Each variable explained with a worked example.

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Formulas Used

Depreciation Per Hour

depreciation_per_hour = useful_life_hours > 0 ? purchase_price / useful_life_hours : 0

Depreciation Cost (this period)

depreciation_cost = useful_life_hours > 0 ? (purchase_price / useful_life_hours) * usage_hours : 0

Total Equipment Cost (this period)

total_cost = useful_life_hours > 0 ? (purchase_price / useful_life_hours) * usage_hours + maintenance : maintenance

All-In Cost Per Hour

cost_per_hour = usage_hours > 0 ? ((purchase_price / useful_life_hours) * usage_hours + maintenance) / usage_hours : 0

Variables

VariableDescriptionDefault
purchase_pricePurchase Price(USD)50000
useful_life_hoursUseful Life(hours)10000
usage_hoursUsage Hours (this period)(hours)160
maintenanceMaintenance Cost (this period)(USD)500

How It Works

How to Calculate Equipment Costs

Formula

Total Equipment Cost = (Purchase Price / Useful Life Hours) x Usage Hours + Maintenance

This formula accounts for depreciation (the cost of owning the equipment spread over its useful life) plus periodic maintenance costs. Knowing your true equipment cost per hour helps you price jobs accurately.

Worked Example

An excavator purchased for $50,000 with a 10,000-hour useful life, used 160 hours this month with $500 in maintenance.

purchase_price = 50000useful_life_hours = 10000usage_hours = 160maintenance = 500
  1. 01Depreciation per hour = $50,000 / 10,000 = $5.00/hr
  2. 02Depreciation this period = $5.00 x 160 = $800
  3. 03Total cost = $800 + $500 = $1,300
  4. 04All-in cost per hour = $1,300 / 160 = $8.13/hr

Ready to run the numbers?

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