Commercial equipment
Equipment ownership cost per hour
Recover economic ownership and running cost at realistic utilization.
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
((purchase-salvage)/life+annual fixed)/annual hours+variable per hour.
Straight-line economic depreciation. Other fixed costs exclude depreciation; variable costs exclude fixed costs. This is a simplified ownership model, not cash flow or a loan payment.
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
- Purchase price (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for purchase price. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
- Expected salvage value (selected currency): Owner’s expected end-of-life sale receipt; scenario assumption, not appraisal.
- Economic life (years): Expected economic service years, not tax depreciation life.
- Other annual fixed costs (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for other annual fixed costs. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
- Annual use (hours/year): Use matching records or a clearly identified owner assumption for annual use, in the displayed unit and the stated row/period scope.
- Variable operating cost per hour (selected currency): Usage-dependent cost total ÷ matching operating hours; exclude fixed costs and depreciation.
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: Economic ownership and operating cost per hour is $19.00 for the illustrative inputs below.
Example inputs
- Purchase price: $30,000.00
- Expected salvage value: $5,000.00
- Economic life: 5.00 years
- Other annual fixed costs: $2,000.00
- Annual use: 1,000.00 hours/year
- Variable operating cost per hour: $12.00
- Economic ownership and operating cost per hour
- $19.00
- Annual fixed ownership cost
- $7,000.00
- Annual total modeled cost
- $19,000.00
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Recover economic ownership and running cost at realistic utilization.
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.