What does your equipment really cost per hour?
Ask five contractors what their mini excavator costs per hour and you'll get five numbers. Usually it's the payment divided by something, or whatever the rental house charges, or a rate someone set years ago that nobody has checked since. Then the T&M ticket goes out at a rate that doesn't cover the iron, or the bid carries a rental when the company already owns a machine sitting in the yard. The free equipment rate sheet above works it out properly: ownership and operating cost for the equipment you own, the true all-in cost of the equipment you rent, and a billing rate for each with the operator and markup.
Owned equipment: the ownership + operating method
The standard way to cost owned equipment splits it into two buckets. The sheet does the math across a row for each unit.
Ownership cost (you pay it whether the machine runs or not)
- Depreciation $/hr = (purchase price − salvage value) ÷ useful life in hours. Use the delivered price including attachments that stay on the machine, and a realistic resale value. Recent auction results for the same class and age are a good check.
- Interest, insurance, and property tax $/hr: each is a percentage per year of the average investment, (purchase + salvage) ÷ 2, divided by annual operating hours. Interest is your borrowing rate, or the return you give up by paying cash. Insurance and tax come from your policy and your tax bill.
Operating cost (only when it runs)
- Fuel $/hr = gallons per hour × price per gallon. Take gal/hr from your own fuel logs. Load factor matters more than engine size: a machine idling half the day burns far less than one trenching in rock.
- Maintenance & repair $/hr = annual maintenance and repair as a % of purchase price, divided by annual hours. Your shop records are the best source.
- Other wear $/hr: tires or tracks, cutting edges, teeth, filters, lube, and anything else that wears out in proportion to hours.
Total cost $/hr = ownership + operating. The sheet also converts it to a daily and weekly cost using your hours per day and days per week.
Annual hours drive the owned rate
Look at the formulas and you'll see annual hours in the denominator of interest, insurance, tax, and maintenance. A telehandler that runs 1,100 hours a year carries those costs over 1,100 hours. If the same machine only runs 400 hours, every one of those costs almost triples per hour. That's the real cost of idle equipment, and it's why a machine that mostly sits in the yard is often cheaper to rent. Use hour-meter readings or equipment time from daily reports, not a guess.
Rented equipment: the all-in cost per hour
The rental house quote is never the whole cost. The Rented Equipment tab adds up what you actually pay:
| Charge | How the sheet handles it |
|---|---|
| Rent | Pick Day, Week, or Month and the number of periods; the sheet uses the matching vendor rate. |
| Delivery & pickup | Both ways, entered separately. On short rentals, freight can double the effective rate. |
| Damage waiver | % of rent. Read the terms, because waivers often exclude theft, tires, glass, and misuse. |
| Environmental / other fees | Environmental, fuel surcharge, cleaning, and similar fees. |
| Rental tax | % applied to rent + waiver + fees. Taxability of freight and waiver varies by state. |
| Fuel | You still buy the fuel. Estimate it for the period. |
Cost $/hr = total rental cost ÷ the hours the rental period covers (a rental "month" is usually a 4-week billing cycle, and the sheet lets you set that). A Rate Check column flags when a longer period is cheaper. Four days on a day rate often costs more than a week.
Operator, markup, and the billing rate
Each row has an Operator Included (Y/N) flag and a burdened operator rate. Set Y when you bill the machine with its operator as one rate (common on equipment-only rentals to other contractors and some T&M work). Set N when the operator is already on your labor ticket, so you never bill the same person twice. Markup is applied to cost plus operator, giving a billing rate per hour, day, and week.
Standby, T&M, and what your contract allows
- Standby: when equipment is on site but held idle by the owner or GC, many contracts pay a reduced standby rate, often ownership cost only with no operating cost or operator. The ownership column gives you that number.
- Rate caps: T&M and change-order clauses often cap equipment at a referenced rate schedule or limit markup on rentals. Read the clause before you set the markup.
- Documentation: equipment hours on a T&M ticket need unit numbers and hours per day, signed by the customer. See the T&M ticket template.
This sheet is a costing tool, not tax or accounting advice. Your book depreciation and your costing rate are different numbers, and they should be.
Rent or buy?
Put the rented all-in cost per hour next to the owned cost per hour for the same class. A rough rule many contractors use: if you're renting the same type of machine for a large share of the year, run the numbers on buying. If an owned unit runs well below its planned annual hours, consider selling it and renting when you need one. The rate sheet gives you both numbers side by side so the decision is based on your own costs.
Common mistakes with equipment rates
- Using the loan payment as the cost. The payment ends; the machine keeps costing money. And the payment ignores maintenance, fuel, and insurance.
- Guessing annual hours. Overstate them and every owned rate comes out too low.
- Forgetting freight on rentals. Delivery and pickup on a two-day rental can equal the rent.
- Billing the operator twice, once in the equipment rate and again on the labor line.
- Never updating. Fuel, insurance, and interest rates move. Re-run the sheet at least once a year.
Track equipment hours where they happen
Rates only pay off if the hours get captured. Field PM logs equipment hours on daily reports and T&M tickets, charges them to the job budget at your rates, and tracks tools and small equipment by QR code with tool tracking. The numbers in this sheet become the numbers on the job. Start a free 30-day trial, no credit card required.
Related free templates and calculators
- Equipment inspection checklist: daily pre-use inspections
- Time & material ticket: bill equipment hours with signed backup
- Quantity takeoff template: carry equipment into your bid recap
- Labor burden calculator: build the burdened operator rate
- Markup vs. margin calculator: set equipment markup correctly
- Browse all free construction templates
