Equipment Owning and Operating Hourly Rate
Owning (depreciation + interest/insurance/tax carry) plus operating (fuel + maintenance + wear) per hour.
Example
You enter
- Purchase price ($) 50000
- Salvage value ($) 10000
- Useful life (hours) 5000
- Hours operated per year 1000
- Interest+insurance+tax (%/yr of avg value) 8
- Fuel burn (gal/hr) 2
- Fuel price ($/gal) 4
- Maintenance ($/hr) 4
- Tires/wear ($/hr) 1
You get
- Owning cost 10.72
- Total hourly rate $23.72/hr
Checked against published worked examples from: Caterpillar.
Details, formula, and sources
ScopeOwning (depreciation + interest/insurance/tax carry) plus operating (fuel + maintenance + wear) per hour, the CAT/AED method. A $50K skid steer, $10K salvage, 5,000-hr life at 1,000 hr/yr -> $23.72/hr (IIT on the CAT average annual investment); running it more spreads the fixed carry thinner. The owner costs and utilization govern.
Formula or tabledeprec = (purchase - salvage)/life_hr; IIT = (iit%/100) x [purchase (N+1) + salvage (N-1)] / (2N) / annual_hr, N = life_hr / annual_hr; owning = deprec + IIT; operating = fuel_gph x price + maint + wear; total = owning + operating.
Source and editionThe CAT / AED equipment owning-and-operating cost-recovery method, by name.
Free accessThe owning-and-operating build-up is published in the Caterpillar Performance Handbook and AED cost-recovery guidance. The owner's actual costs, financing, and utilization govern.
What governsEstimate. AHJ and licensed professional govern.
API field namespurchase, salvage, life_hr, annual_hr, iit_pct, fuel_gph, fuel_price, maint_hr, wear_hr, owning_hr, total_hr
- Owning straight-line depreciation + IIT carry on the average annual investment [P(N+1) + S(N-1)] / 2N / annual hoursCaterpillar Performance Handbook Ed. 41, Sec. 20
- Operating fuel (gph x price) + maintenance + tires/wear per hourCAT / AED method
- Utilization more annual hours spread the fixed carry thinner; a cost rate, not a rental ratescope of this tile