Inputs
Enter your own numbers, then use the result as a pricing checkpoint before you send a customer quote.
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Equipment Depreciation Calculator
Estimate straight-line depreciation, book value, hourly depreciation, and replacement reserve for compact equipment ownership planning.
How This Calculator Helps
Use this calculator to account for the value a machine gives up while it works, even when there is no monthly payment left.
It is built for including machine value loss in cost per hour. The goal is not to copy a rate book or guess from a competitor rumor. The goal is to make the cost floor visible, then add the job-specific items that decide whether the work actually pays.
The main decision is how much value loss belongs in each year and each billable hour of machine work. The biggest risks to check are pricing paid-off equipment too cheaply, ignoring replacement cost, overestimating resale value, and failing to reserve for the next machine. If one of those risks is present, adjust the input before quoting rather than hoping the job goes perfectly.
Input Notes
- Purchase Price ($): Use the most recent number you trust and keep a note of where it came from. Update it when your local costs, machine condition, or customer expectations change.
- Expected Resale Value ($): Use the most recent number you trust and keep a note of where it came from. Update it when your local costs, machine condition, or customer expectations change.
- Useful Life (years): Use the most recent number you trust and keep a note of where it came from. Update it when your local costs, machine condition, or customer expectations change.
- Current Age (years): Use the most recent number you trust and keep a note of where it came from. Update it when your local costs, machine condition, or customer expectations change.
- Annual Billable Hours: Use realistic billable time. Include condition, setup, cleanup, waiting, and the slower pace that comes with tight access or unclear customer scope.
- Repair Reserve ($/hr): Use the most recent number you trust and keep a note of where it came from. Update it when your local costs, machine condition, or customer expectations change.
Formula, Example, and Quote Checks
Plain-English Formula
Annual depreciation = (purchase price - expected resale value) / useful life. Hourly depreciation = annual depreciation / annual billable hours.
Worked Example
A $65,000 machine with $25,000 expected resale over 6 years loses about $6,667 per year, or $9.52/hour at 700 billable hours.
Quote Checks
Use conservative resale value and realistic annual billable hours so paid-off equipment is not priced like it is free.
Quote Checks
- Use depreciation even when there is no loan payment.
- Review resale value after major hours or damage.
- Raise replacement reserve when new equipment prices climb.
- Combine depreciation with repair reserve for true ownership cost per hour.
Write the scope in normal job language. Include what the customer gets, what is excluded, when extra charges apply, and whether material quantities are allowances. A clear scope protects the customer and the operator.
Financial, Tax, and Lending Disclaimer
These calculators are planning tools only. They are not financial, tax, accounting, legal, insurance, investment, lending, or business advice. Do not use the results as the sole basis for taking a loan, buying or selling equipment, setting depreciation, preparing taxes, signing a contract, or accepting job risk.
Actual payments, interest, lender fees, taxes, depreciation rules, resale value, repair cost, insurance, cash flow, and contract obligations can vary. Confirm lender disclosures, tax treatment, legal terms, local requirements, and your own records with qualified professionals before committing money or quoting work.
FAQ
Can I use this equipment depreciation and replacement calculator as the final price?
Use it as a planning estimate before the final quote. Walk the site, confirm access, customer expectations, material quantities, and risk. The calculator gives you a cost-based number so you are not starting from a guess.
Which input should I check first for Equipment Depreciation Calculator?
Use conservative resale value and realistic annual billable hours so paid-off equipment is not priced like it is free.
Why does this calculator include margin?
Margin is what lets the business survive after direct cost. If the job only pays for fuel, labor, payment, and material, there is no room for callbacks, slow days, admin time, or future equipment replacement.
How should I compare the result with local rates?
Use the result as your floor, then compare local market prices. If competitors are cheaper, look at scope, mobilization, insurance, operator skill, and whether they are including the same costs. Passing on underpriced work is sometimes the best decision.