Commercial equipment
Equipment minimum rental rate
Find a rental charge that covers owner costs downtime and target margin.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
rate=(annual fixed/billable hours+variable)/(1-margin).
Gross margin is profit divided by selling price. Enter all costs on the same time basis. Rates and productivity are your assumptions, not industry averages. Billable hours already reflect expected downtime and vacancies; do not reduce them twice.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Annual fixed owner costs (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for annual fixed owner costs. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
- Expected annual billable rental hours (hours/year): Expected BILLABLE rental hours after vacancies/downtime; do not reduce twice.
- Variable cost per billed rental hour (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for variable cost per billed rental hour. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
- Target gross margin (%): Owner-selected gross profit as a percentage of SELLING PRICE, not markup on cost.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Required rental rate per hour is $37.50 for the illustrative inputs below.
Example inputs
- Annual fixed owner costs: $20,000.00
- Expected annual billable rental hours: 1,000.00 hours/year
- Variable cost per billed rental hour: $10.00
- Target gross margin: 20.00 %
- Required rental rate per hour
- $37.50
- Cost per billed rental hour
- $30.00
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Find a rental charge that covers owner costs downtime and target margin.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.