Machine hour rate (MHR) is what one hour of a machine costs you: its total yearly cost — depreciation, interest, operator, power, maintenance, tooling and overhead — divided by its productive hours. Every hour that machine stands idle, you still carry that cost but sell nothing against it. This calculator multiplies your idle machine-hours by your machine hour rate to show what those unsold hours cost in rupees per year.
How the calculator works
The calculator takes four inputs and does three multiplications:
- Machines on the floor — how many machines you are counting (for example all VMCs and CNC lathes in one bay).
- Idle hours per machine per day — the average hours each machine is available in the shift but not cutting: waiting for material, setup, tool change, no operator, no job.
- Machine hour rate (₹/h) — your costed rate per machine-hour. If you don't have one, the worked example below shows how to build it.
- Working days a year — days the shop runs.
The formula:
Idle machine-hours a day = machines × idle hours per machine
Cost per day = machines × idle hours × machine hour rate
Cost per year = cost per day × working days
The result shows idle machine-hours a day, cost per day in ₹, and cost per year in lakh (or crore above ₹1 crore). It treats every machine as having the same rate and the same idle hours — enter averages, or run it separately for each machine group.
The calculator does not compute the machine hour rate itself; you enter it. The standard way to build it is:
MHR = (depreciation + interest + operator + power + maintenance & tooling + allocated overhead) ÷ productive machine hours per year
Worked example (India)
A 12-machine auto-component machining shop, single shift. All figures are assumptions for illustration, except the operator wage, which is the Haryana minimum wage for skilled workers (₹18,500.81/month, Haryana Labour Department notification No. 2/25/26-2 Lab, 9 April 2026). Plug in your own.
Step 1 — build the machine hour rate for one VMC
| Cost item (per machine, per year) | ₹/year | Basis |
|---|---|---|
| Depreciation | 2,50,000 | Assumption: ₹25 lakh VMC, 10-year straight line |
| Interest on capital | 1,25,000 | Assumption: 10% on average balance of ₹12.5 lakh |
| Operator | 2,22,010 | Haryana skilled minimum wage × 12 (wage only, no statutory add-ons) |
| Power | 1,28,000 | Assumption: 8 kW average × 2,000 h × ₹8/kWh |
| Maintenance & tooling | 1,50,000 | Assumption: AMC, inserts, coolant |
| Allocated overhead | 1,00,000 | Assumption: space, lighting, supervision share |
| Total | 9,75,010 | |
| Productive hours | 2,000 | Assumption: 8 h × 300 days = 2,400 planned, ~2,000 productive |
| Machine hour rate | ≈ ₹490/h | 9,75,010 ÷ 2,000 = ₹487.5 |
Step 2 — put it into the calculator
| Input | Value |
|---|---|
| Machines on the floor | 12 |
| Idle hours per machine per day | 2.5 (assumption) |
| Machine hour rate | ₹490/h |
| Working days a year | 300 |
| Idle machine-hours a day | 30 h (12 × 2.5) |
| Cost per day | ₹14,700 (30 × 490) |
| Cost per year | ₹44.10 lakh (14,700 × 300) |
2.5 idle hours in an 8-hour shift is about 31% of planned time — a modest assumption next to the utilisation figures below. Note also that if the 2,000 "productive hours" in Step 1 are really 1,200 cutting hours, the true rate is about ₹813/h, and the idle cost scales with it.
What typical numbers look like
- Machine utilisation is low almost everywhere. MachineMetrics, which instruments CNC machines, states that "the average manufacturer has a utilization rate of just 28%". Treat this vendor figure as direction, not a benchmark.
- OEE typically sits near 55–60%, world-class at 85%. Evocon's data from 3,500+ machines in 50+ countries puts most plants at 55–60% OEE, with only ~6% reaching 85%; Vorne's OEE.com says most companies are "closer to 60%".
- Indian auto suppliers: 60–75% OEE at Tier 1, 40–58% at Tier 2–3. These are typical ranges from TeepTrak's 2026 India sector benchmark — a vendor estimate, not an audited survey.
- VMC purchase prices in India span roughly ₹7.5 lakh to ₹56 lakh for common listings on IndiaMART; one listed Ace Micromatic MCV 400 is ₹18.5 lakh on TradeIndia.
- Published Indian machine hour rates: we found no credible public survey of MHR by machine type in India. Online job-work rates vary too widely to use — build your own from the formula above.
What this number does not tell you
- It is not all cash out of pocket. Idle hours are charged at the full MHR, but power and tooling are mostly not spent while a machine sits idle. The full figure is the cost you fail to recover, not cash spent.
- Your rate may already be wrong. If your MHR divides by optimistic hours, the rate is too low and the idle cost is understated.
- It doesn't say why the machines are idle. Waiting for material, setup, no operator and no orders need different fixes. Idle time with no orders behind it is a sales problem, not a shop-floor one.
- Averages hide the bottleneck. One constrained machine idle for an hour can cost more than ten non-constrained machines idle for the same hour.
- Your idle-hours figure is probably a guess. Most shops estimate idle time from memory or shift logs, which tend to undercount short stops and late starts.
Related guides
- Machine Hour Rate in India: Count the Hours You Never Sold
- Spindle Utilisation: What 25%, 45% and 70% Mean on an Indian Floor
- Before You Buy Another CNC: Prove the Capacity You Already Have
- Tracking Old CNCs Without a PLC: Logs vs Current Sensors vs Cameras (₹)
- OEE Benchmarks for Indian Factories: What 'Good' Actually Looks Like
FAQ
How do you calculate machine hour rate? Add up a machine's yearly costs — depreciation, interest on capital, operator wages, power, maintenance and tooling, and its share of overhead — and divide by the hours it is productive in a year. A ₹9.75 lakh yearly cost over 2,000 productive hours gives about ₹490 per hour.
What is a good machine hour rate for a CNC machine in India? There is no single published figure; it depends on machine price, shifts, wages, power tariff and how many hours the machine actually cuts. A rate built on the formula above with your real productive hours is the only defensible number for quoting.
How do I calculate the cost of idle machine hours? Multiply the number of machines by average idle hours per machine per day, then by your machine hour rate, then by working days a year. For 12 machines idle 2.5 hours a day at ₹490 per hour over 300 days, that is about ₹44 lakh a year.
Should idle time be included in machine hour rate? Productive hours should be the realistic hours the machine works, not nameplate hours. If you divide by hours it never actually runs, the rate comes out too low and every quote under-recovers cost.
Why is my machine hour rate higher than my competitor's quote? Often because the competitor divides by more hours (two or three shifts, or optimistic loading), uses an older depreciated machine, or simply under-recovers cost. Check your productive-hours assumption before you cut the rate.
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