The maths, explained
Ownership continues to cost money when a machine is parked. The model spreads purchase price less resale value over useful life and annual operating hours, adds annual fixed costs per hour, then adds variable running costs. This is a straight-line planning model. It does not automatically add finance interest, tax relief, downtime, transport or operator labour.
Hourly cost = (purchase − resale) ÷ (years × annual hours) + annual fixed costs ÷ annual hours + variable hourly costs
A worked example
The worked example below uses the calculator’s initial inputs and the same calculation function as the live interface. Replace example amounts with your own records; changing currency does not convert the numbers. Physical reference dimensions are stored in metric units, and the interface can display their imperial equivalents. Rounded display values may differ slightly from the full precision retained in the calculation.
| Your inputs | Editable example — not a market quote |
|---|---|
| Purchase price (GBP) | 80,000 |
| Estimated resale value (GBP) | 20,000 |
| Useful life (years) | 8 |
| Annual operating hours | 1,000 |
| Annual insurance, storage and other fixed costs (GBP) | 3,000 |
| Fuel, maintenance and consumables per hour (GBP) | 22 |
| Cost per operating hour | £32.50 |
| Annual estimated cost | £32,500.00 |
| Hourly depreciation | £7.50 |
Assumptions used
All cost inputs must cover the same period and use one currency. Employer charges and overhead remain business-specific inputs. Defaults are educational scenarios, not market averages. This model does not determine tax obligations or contractual rights. Ratios with a zero denominator are marked as undefined rather than presented as a misleading zero percent.
On your side of the Atlantic
Use metres, square metres and supplier quotations in pounds. UK VAT depends on the work and eligibility: 20% is a common standard-rate reference, not an assumption applied by this tool.
Common mistakes
Do not use expected resale above the purchase price. Annual operating hours have a strong effect on ownership cost. Separate machine costs from operator wages and use the same approach when comparing a rental quote.
Before ordering or tendering, compare at least two scenarios: your base takeoff and a realistic alternative. Keep assumptions with the result so differences are explainable. Save an estimate only on a suitable device. A shared link contains the entered values, so avoid including confidential information. An exported estimate is a snapshot and does not update when a supplier changes a price.
Questions from the jobsite
What does this calculator measure?
What is the first mistake to avoid?
Are the example prices supplier quotes?
Which tax assumptions apply in United Kingdom?
How should I handle waste and contingency?
Can I use the result in a tender or estimate?
Planning estimate only. Not a substitute for a professional quote or local building-code compliance. Verify quantities, tax treatment and contract requirements.
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