What This Calculator Does
The equipment cost calculator finds the true hourly cost of owning and running a piece of contractor equipment — trucks, excavators, generators, compressors, or specialty tools — by combining depreciation, maintenance, and fuel or energy costs.
Many contractors price jobs using only fuel cost or a rough daily rate, which underestimates the real cost of equipment ownership and quietly erodes profit on equipment-heavy jobs.
How Equipment Cost Is Calculated
Annual depreciation is (purchase price − salvage value) ÷ useful life in years. Add annual maintenance and repair costs to get your total annual owning cost. Add annual fuel or energy cost (hourly fuel cost × annual usage hours) to get total annual cost. Divide by annual usage hours for your true cost per operating hour.
This hourly rate should be built into your bids any time that equipment is used — either as a line item or folded into your overhead recovery rate.
Own vs. Rent Equipment
- Own when usage is high and steady: If you use a piece of equipment on most jobs, ownership usually costs less per hour than renting.
- Rent for occasional or specialty needs: Equipment used only a few times a year rarely justifies the purchase, maintenance, and storage cost of ownership.
- Compare your calculated cost-per-hour to local rental rates: If your ownership cost per hour is close to or higher than rental rates, renting may be more efficient.
Frequently Asked Questions
How do you calculate the cost of owning equipment?
Add annual depreciation (purchase price minus salvage value, divided by useful life) to annual maintenance and fuel costs, then divide by annual usage hours for a cost per hour.
Should equipment cost be included in job bids?
Yes. Equipment ownership costs — depreciation, maintenance, and fuel — should be built into bids as either a line item or part of your overhead recovery rate.
Is it cheaper to rent or own construction equipment?
It depends on usage. High, steady use usually favors ownership; occasional or specialty use usually favors renting, since ownership carries fixed depreciation and maintenance costs regardless of use.
What is equipment depreciation?
Depreciation is the loss in value of equipment over its useful life, calculated as (purchase price minus salvage value) divided by years of useful life.
Related Calculators
These tools work best when used together with this calculator.
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