How to use it
- Enter the Fixed Cost per Period: depreciation or finance, insurance, registration and any costs you pay whether the machine works or not. Use a month or a year, and stay with that period.
- Enter the Revenue per Hour the machine earns, for example your hourly rental or charge-out rate.
- Enter the Variable Cost per Hour: fuel, operator, maintenance and wear parts that you pay only when the machine runs.
- Read the Contribution Margin (what each hour earns after variable cost) and the Break-even Hours for the period. Compare the hours with what the machine can realistically work.
The formula
Contribution margin per hour = revenue per hour − variable cost per hour. Break-even hours = fixed cost for the period ÷ contribution margin. Every hour beyond the break-even point adds the contribution margin as profit.
What changes the result
A small contribution margin makes break-even hours rise quickly: a few dirhams more on the hourly rate, or a few less in fuel and operator cost, can cut the hours needed by a large amount. If the revenue per hour is no higher than the variable cost, there is no contribution and the machine cannot break even - the calculator then shows 0 hours, which means "not reachable", so raise the rate or cut variable costs.
Using the result
Compare the break-even hours with the hours you can really sell in the same period. In the UAE heat, summer midday restrictions, breakdowns, moves between sites and gaps between hires reduce billable hours below the hours in the calendar. To get the fixed cost, use the ownership cost calculator, and to price the rate, use the rental cost calculator.
Worked examples
- A machine with AED 120,000 of fixed cost per period earns AED 350 an hour and spends AED 120 an hour to run. Each hour contributes AED 230.00, so it must work 521.739 hr to break even.
- Raise the rate to AED 450 an hour on the same machine and the contribution is AED 330.00, so break-even drops to 363.636 hr.
- A small loader with a monthly fixed cost of AED 60,000, charged out at AED 220 an hour with AED 90 an hour of variable cost, breaks even at 461.538 hr a month (contribution AED 130.00 an hour).
- A crane with AED 480,000 of fixed cost per year, AED 600 an hour revenue and AED 250 an hour variable cost must work 1,371.429 hr a year to break even.
Break-even hours by hourly rate
Printable chart| Revenue per hour (AED) | Contribution per hour | Break-even hours |
|---|---|---|
| 150 | AED 30.00 | 4,000 hr |
| 200 | AED 80.00 | 1,500 hr |
| 250 | AED 130.00 | 923.077 hr |
| 300 | AED 180.00 | 666.667 hr |
| 350 | AED 230.00 | 521.739 hr |
| 400 | AED 280.00 | 428.571 hr |
| 450 | AED 330.00 | 363.636 hr |
| 500 | AED 380.00 | 315.789 hr |
| 600 | AED 480.00 | 250 hr |
For AED 120,000 fixed cost per period and AED 120 variable cost per hour. A higher rate lowers the hours needed.
Frequently asked questions
How do I calculate break-even hours for equipment?
Divide the fixed cost for the period by the revenue per hour minus the variable cost per hour. The calculator does this and shows the contribution margin as well.
What period should I use for the fixed cost?
Any period, as long as you use it consistently. If you enter a monthly fixed cost the result is break-even hours per month; with a yearly cost it is per year.
What if the contribution margin is negative or zero?
Then the machine loses money on every hour it works and cannot break even. Raise the revenue per hour or reduce the variable cost per hour.
Which costs are fixed and which are variable?
Fixed costs are paid whether the machine works or not: depreciation, finance, insurance and registration. Variable costs only occur when it runs: fuel, operator, maintenance and wear parts.
Can I include standby time?
Yes. Include the cost of idle time in the fixed cost, or add it to the variable cost per hour as an average over the hours worked.
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<iframe src="https://www.equipmentsfinder.com/embed/field-tools/equipment-break-even-utilization" title="Equipment break-even utilization calculator" width="100%" height="620" style="border:0;max-width:720px" loading="lazy"></iframe> <p style="font-size:12px"><a href="https://www.equipmentsfinder.com/en-us/field-tools/equipment-break-even-utilization">Equipment break-even utilization calculator</a> by <a href="https://www.equipmentsfinder.com">EquipmentsFinder</a></p>