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Equipment Hourly Rate Calculator
What should you charge per hour for your excavator? Input your real ownership costs, fuel, insurance, maintenance, operator wage, overhead, and profit margin. The calculator shows your minimum billable rate with a full cost breakdown. No guessing, no “industry averages” that do not match your machine. Your numbers, your rate.
The math, shown transparently
This is the standard equipment rate formula used by the FHWA, US Army Corps of Engineers (EP 1110-1-8), and FAO. No black box. Every number is visible in the breakdown above.
// Ownership — costs of having the machine
depreciation/hr = (purchase − salvage) / useful_life_hours
finance/hr = ((purchase + salvage) / 2 × rate) / annual_hours
insurance/hr = annual_insurance / annual_hours
// Operating — costs of running the machine
fuel/hr = gallons_per_hour × price_per_gallon
maintenance/hr = depreciation/hr × maintenance_factor
// Operator — loaded labor cost
operator/hr = base_wage × burden_multiplier
// Final rate
subtotal = ownership + operating + operator
with_overhead = subtotal × (1 + overhead%)
billable_rate = with_overhead × (1 + profit%) ← your minimum rate
Fuel consumption by machine class
These are medium-load figures from the Caterpillar Performance Handbook and dealer reference data. Use them as starting points. Your actual consumption depends on duty cycle, altitude, and machine condition.
| Machine | Low | Medium | High |
|---|---|---|---|
| Mini excavator (3–8 ton) | 1.0 | 2.0 | 3.0 |
| Mid-size excavator (20–30 ton) | 3.5 | 5.0 | 7.0 |
| Large excavator (30+ ton) | 5.0 | 8.0 | 12.0 |
| Skid steer | 1.5 | 2.5 | 3.5 |
| Compact track loader | 2.0 | 3.0 | 4.0 |
| Dozer D3–D6 | 2.5 | 4.0 | 6.0 |
| Wheel loader | 3.5 | 5.0 | 7.0 |
Units: gallons per hour (US). Sources: Caterpillar Performance Handbook, Komatsu spec sheets, dealer reference data. Medium load (highlighted) is the default for estimating.
Maintenance reserve: the number most contractors miss
The maintenance factor is expressed as a fraction of hourly depreciation. The industry standard (from the FAO machine rate guide and USACE EP 1110-1-8) is:
- 0.40–0.50 for equipment in the first half of its useful life. This covers regular maintenance, filters, fluids, and minor repairs.
- 0.80–1.00+ for equipment in the second half. Undercarriage rebuilds, hydraulic cylinder repairs, and major component replacement drive costs up.
Over an excavator's full life, total maintenance and repair cost typically equals 60 to 100 percent of the original purchase price. Contractors who skip this line item subsidize every job with deferred maintenance and wonder why the machine needs a $40,000 rebuild at 8,000 hours.
Billable hours vs. calendar hours
Do not plan on 2,000 hours per year. That is 8 hours a day, 250 days a year with no weather, no maintenance, no mobilization, no gaps between jobs. Realistic utilization for a small excavation contractor:
- Southern US, year-round: 1,200–1,600 hours
- Northern US, seasonal (April–November): 800–1,200 hours
- Specialty equipment (used selectively): 400–800 hours
If you plug in 2,000 hours, your rate looks low because you are spreading ownership costs over hours that do not exist. The machine sits in the yard during rain days, between jobs, and all winter. Those idle hours still cost you depreciation, insurance, and finance charges. Be honest about utilization or you will lose money on every job and not understand why.
Frequently asked questions
What is a good profit margin for excavation work?
Industry average net profit for specialty contractors is 6 to 10 percent. Top performers hit 10 to 20 percent. For equipment rates specifically, a 10 to 15 percent profit markup on top of fully-loaded cost is standard. This calculator defaults to 15 percent, which is a reasonable target for a small excavation contractor.
How many billable hours should I expect per month?
For a small excavation contractor (3 to 15 employees), realistic annual utilization is 1,000 to 1,200 hours for primary equipment. That is roughly 80 to 100 hours per month. Northern seasonal operations may be lower (800 to 1,000 hours). Southern year-round operations may push to 1,400 hours. Do not plan on 2,000 hours. If utilization is under 400 hours per year, you may be better off renting.
Should I include my own wage as operator?
Yes. Even if you are the owner-operator, your time has an opportunity cost. If you are in the seat, you are not estimating, managing, or selling. Pricing your time at zero makes the rate look artificially low and subsidizes every job with free labor. Charge at least what you would pay a competent operator.
How do I calculate fuel consumption per hour?
Use the machine manufacturer specs as a starting point. Most manufacturers publish gallons per hour at low, medium, and high load. For estimating, use the medium load figure. Common ranges: mini excavator 1.5 to 3 gal/hr, mid-size excavator (20 to 30 ton) 4.5 to 6 gal/hr, skid steer 2 to 3 gal/hr, dozer D3 to D6 3 to 5 gal/hr. These come from the Caterpillar Performance Handbook.
What about wear items like teeth, tracks, and hoses?
They are covered by the maintenance factor. The maintenance factor is expressed as a multiple of hourly depreciation. A factor of 0.50 means your maintenance and repair budget is 50 percent of your depreciation cost per hour. This is the industry standard for equipment in the first half of its useful life. Older machines should use 0.80 to 1.0 or higher. Undercarriage, teeth, and hydraulic repairs are all included in this number.
Why is my calculated rate higher than what rental houses charge?
Rental companies achieve much higher utilization rates than owner-operators. A rental house might bill 1,800 hours per year on a machine while a small contractor bills 1,100. Higher utilization spreads ownership costs over more hours, lowering the per-hour rate. They also buy in fleet volumes at lower prices, have in-house mechanics, and carry less overhead per machine. Your rate needs to cover your actual utilization, not theirs.
What is the difference between markup and margin?
Markup is applied to cost. Margin is the percentage of the selling price that is profit. A 20 percent markup on a $100 cost gives a $120 price with $20 profit, which is a 16.7 percent margin. A 15 percent markup gives a 13 percent margin. This calculator uses markup (applied to cost plus overhead), which is how most contractors think about pricing.
Is this free forever?
Yes. No signup, no email, no watermark. SpoilStack is a paid job tracker for excavation contractors. This calculator is free.
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