Calculator guide
Every field in the calculator, explained.
This is the real thing, not a summary: what each input means, what unit it's in, where to find the number, and the mistake that throws the rate off. Read it here, then run your own numbers.
Open the free calculator →Step 1
You
Target annual owner pay, before tax
- Unit
- Money, per year, in the currency you picked
- Where
- The wage the shop pays you in a year, before income tax — what you'd have to pay someone to do your job.
- Mistake
- Putting in what the shop bills, or your household total. This is your pay, and the calculator counts it once, here.
Hours per week
- Unit
- Hours per week
- Where
- The hours you actually put into the shop in a normal week: machine time, quoting, email, ordering, cleanup.
- Mistake
- Entering only the hours you spend standing at the machine. Your whole working week goes here.
Weeks per year
- Unit
- Weeks per year — the maths never uses more than 52
- Where
- How many weeks a year you actually work.
- Mistake
- Leaving it at 52 when you take holidays or close the shop for a week. The calculator caps it at 52 either way.
Billable time
- Unit
- Percent, from 20 to 100
- Where
- The share of your working hours you can bill to a customer.
- Mistake
- Setting it to 100%. Setup, quoting, ordering and shop admin aren't billable, and pretending they are is the fastest way to a rate that's too low.
Profit margin
- Unit
- Percent, from 0 to 50
- Where
- What you want left over on top of your costs.
- Mistake
- Reading it as a markup on materials, or leaving it at 0 and pricing at break-even with nothing left for the quiet weeks.
Your current hourly rate (optional)
- Unit
- Money per hour, in your currency
- Where
- What you actually charge today.
- Mistake
- Typing the rate you wish you charged. It's only used to compare, and it's what switches on the 'paying yourself' line.
Step 2
Your machines
Name
- Unit
- Text — a label only
- Where
- Whatever you call the machine.
- Mistake
- Nothing. It doesn't change the maths.
Type
- Unit
- CO2 laser, Fiber laser, Diode laser, CNC router, 3D printer or Other
- Where
- Pick the closest match. Choosing a type fills in typical life, resale and maintenance you can edit.
- Mistake
- Leaving a machine on the wrong type, so it keeps that type's defaults instead of yours.
Purchase price
- Unit
- Money
- Where
- What you actually paid for it.
- Mistake
- Using today's replacement price — or leaving out a machine you already own. Its cost per hour still belongs in your rate.
Life (years)
- Unit
- Years
- Where
- How long you expect to run it before you replace it.
- Mistake
- Leaving the default when you know it's on its last year.
Resale at end (%)
- Unit
- Percent
- Where
- Roughly what it'll still be worth when you retire it.
- Mistake
- Leaving it at 0 when you'll sell it, which charges you for the whole machine instead of the part you use up.
Maintenance
- Unit
- Money per year
- Where
- Repairs, servicing, and the consumables that come from running it.
- Mistake
- Leaving it at 0, or counting only the one big repair and forgetting the small ones.
Step 3
Monthly overhead
Shop space, Insurance, Software, Electricity, Internet / phone, Marketing, Accounting, Other
- Unit
- Money per month, each field
- Where
- Your monthly bills, averaged over the year. The step shows the monthly and yearly total as you type.
- Mistake
- Two common ones: putting materials in here (they belong on the job, not in your hourly rate), and putting your own pay in here as well as in step 1, which counts it twice.
The formula, in plain language
- Working hours a year
- Hours per week × weeks per year (weeks capped at 52)
- Billable hours a year
- Working hours a year × billable time
- Machine cost a year
- For each machine: purchase price × (1 − resale %) ÷ life in years, plus its maintenance a year. Add every machine up.
- Overhead a year
- Everything in step 3 added together, × 12
- Your cost a year
- Owner pay + machine cost + overhead
- Break-even rate
- Cost a year ÷ billable hours. This is the rate that covers everything and leaves you nothing extra.
- Your rate
- Break-even rate ÷ (1 − profit margin)
A worked example
Illustrative, using the calculator's starting numbers — not your numbers. The amounts are bare on purpose: the calculator does no conversion, so read them in whatever currency you picked.
- Your numbers
- Owner pay 50,000 · 40 hrs/week · 48 weeks · 60% billable · 15% margin
- Machine
- CO2 laser · price 8,000 · 5-year life · 25% resale · 400 a year maintenance
- Overhead
- 300 + 100 + 60 + 80 + 80 + 100 + 50 + 0 = 770 a month
- Working hours a year
- 40 × 48 = 1,920
- Billable hours a year
- 1,920 × 0.60 = 1,152
- Machine cost a year
- 8,000 × 0.75 ÷ 5 = 1,200, plus 400 = 1,600
- Overhead a year
- 770 × 12 = 9,240
- Your cost a year
- 50,000 + 1,600 + 9,240 = 60,840
- Break-even rate
- 60,840 ÷ 1,152 = 52.81, shown as 53 an hour
- Your rate
- 52.81 ÷ 0.85 = 62.13, shown as 62 an hour
On the page, the rate and the break-even are rounded to whole units, and the per-hour breakdown is split so the parts add up exactly to the break-even.
What the calculator doesn't include
- Materials — wood, acrylic, filament, sheet metal. They're added per job, not baked into your hourly rate.
- Sales tax. The rate is before HST, GST or VAT.
- Payment processing fees.
- Shipping and delivery.
- Subcontracting or outside services.
- Income tax. Owner pay is the amount before tax.
- Selling time at markets or on the phone, unless you've counted it in your hours per week.
- Currency conversion. Everything stays in the one currency you picked.
Got your numbers?
The calculator is free, needs no signup, and works in your own currency.