1. What Is Equipment Cost Per Hour?

Equipment cost per hour is a financial metric that calculates the hourly operating cost of equipment by dividing the total cost by the number of hours the equipment has been used. This calculation helps businesses understand the true cost of equipment operation for budgeting and pricing purposes.

2. How Does The Calculator Work?

The calculator uses a simple formula:

Where:

• Total Cost — The complete cost of the equipment including purchase, maintenance, and operational expenses ($)
• Hours Used — The total number of hours the equipment has been operated (hrs)

Explanation: This straightforward calculation provides the average cost per hour of equipment operation, which is essential for accurate project costing and equipment valuation.

3. Importance Of Calculating Hourly Equipment Cost

Details: Calculating equipment cost per hour is crucial for businesses to accurately price their services, determine equipment efficiency, make informed decisions about equipment replacement, and properly allocate costs to specific projects or jobs.

4. Using The Calculator

Tips: Enter the total cost of the equipment in dollars and the total hours the equipment has been used. Both values must be positive numbers, with hours used greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What costs should be included in the total cost calculation?
A: Include purchase price, maintenance costs, repair expenses, fuel costs, insurance, and any other direct expenses associated with the equipment.

Q2: How often should I recalculate equipment cost per hour?
A: It's recommended to recalculate periodically (monthly or quarterly) as maintenance costs and usage hours accumulate over time.

Q3: Does this calculation account for equipment depreciation?
A: Yes, when the purchase price is included in the total cost, the calculation naturally accounts for equipment depreciation over its usage life.

Q4: What if my equipment has different usage patterns?
A: For equipment with varying usage, you may want to calculate cost per hour for different time periods to understand seasonal or project-based variations.

Q5: How can I reduce my equipment cost per hour?
A: You can reduce cost per hour by extending equipment life through proper maintenance, increasing utilization hours, or reducing operational costs like fuel consumption.