Cost Per Hour Calculator
This tool calculates the cost of something per hour based on its total cost and the total number of hours it was used, ran, or took.
Enter the total cost incurred and the total hours over which that cost was accumulated.
Enter Cost and Hours
Understanding Cost Per Hour
What is Cost Per Hour?
Cost Per Hour represents the average expense associated with an activity, asset, or service for each hour it is utilized or takes place. It is a fundamental metric for budgeting, pricing, efficiency analysis, and understanding operational costs.
Cost Per Hour Formula
The calculation is straightforward:
Cost Per Hour = Total Cost / Total Hours
It tells you how much each unit of time (an hour) cost based on the total expenditure over a specific duration.
Why Calculate Cost Per Hour?
- Budgeting & Planning: Helps estimate future costs for similar activities.
- Pricing Services: Essential for freelancers, consultants, and service providers charging hourly rates.
- Efficiency Analysis: Allows comparison of costs over different periods or between different resources.
- Resource Management: Useful for understanding the running cost of equipment or personnel.
Cost Per Hour Examples
Click on an example to see the scenario and calculation:
Example 1: Freelance Project Cost
Scenario: A freelancer charges $500 for a project that took 20 hours to complete.
1. Known Values: Total Cost = $500, Total Hours = 20.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $500 / 20 hours
4. Result: Cost Per Hour = $25.
Conclusion: The project cost $25 per hour of the freelancer's time.
Example 2: Machine Operating Cost
Scenario: Running a specific machine for 100 hours costs $750 (including electricity, maintenance, etc.).
1. Known Values: Total Cost = $750, Total Hours = 100.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $750 / 100 hours
4. Result: Cost Per Hour = $7.50.
Conclusion: The machine's operating cost is $7.50 per hour.
Example 3: Consultant Fee Breakdown
Scenario: A business pays a consultant $3000 for 50 hours of work.
1. Known Values: Total Cost = $3000, Total Hours = 50.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $3000 / 50 hours
4. Result: Cost Per Hour = $60.
Conclusion: The effective hourly cost for the consultant is $60.
Example 4: Car Running Cost (Simple)
Scenario: A car costs $150 in fuel for a road trip that took 5 hours of driving time.
1. Known Values: Total Cost = $150, Total Hours = 5.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $150 / 5 hours
4. Result: Cost Per Hour = $30.
Conclusion: The fuel cost for the trip was $30 per driving hour (other costs like wear/tear not included here).
Example 5: Simple Employee Labor Cost
Scenario: An employee is paid $800 for a week where they worked 40 hours.
1. Known Values: Total Cost = $800, Total Hours = 40.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $800 / 40 hours
4. Result: Cost Per Hour = $20.
Conclusion: The basic labor cost for this employee is $20 per hour (doesn't include benefits, taxes, overhead, etc.).
Example 6: Equipment Rental Cost
Scenario: Renting a piece of equipment for 72 hours costs $108.
1. Known Values: Total Cost = $108, Total Hours = 72.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $108 / 72 hours
4. Result: Cost Per Hour = $1.50.
Conclusion: The rental cost for the equipment is $1.50 per hour.
Example 7: Subscription Service Cost Breakdown
Scenario: A monthly software subscription costs $29, and you use it for approximately 15 hours per month.
1. Known Values: Total Cost = $29, Total Hours = 15.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $29 / 15 hours
4. Result: Cost Per Hour ≈ $1.93.
Conclusion: Each hour of using the software costs approximately $1.93.
Example 8: Energy Consumption Cost
Scenario: Running a specific appliance consumes 2 kWh (Kilowatt-hours) over 4 hours, and electricity costs $0.15 per kWh.
1. Known Values: Total Energy Cost = 2 kWh * $0.15/kWh = $0.30, Total Hours = 4.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $0.30 / 4 hours
4. Result: Cost Per Hour = $0.075.
Conclusion: Running the appliance costs $0.075 (7.5 cents) per hour.
Example 9: Learning a Skill
Scenario: You spent $50 on books and courses to learn a new skill, and dedicated 100 hours to studying.
1. Known Values: Total Cost = $50, Total Hours = 100.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $50 / 100 hours
4. Result: Cost Per Hour = $0.50.
Conclusion: The material cost of learning the skill was $0.50 per hour of study.
Example 10: Project Overrun Cost
Scenario: A project was budgeted for $5000 and 100 hours. It finished at $6500 total cost and 130 total hours.
1. Known Values: Total Cost = $6500, Total Hours = 130.
2. Formula: Cost Per Hour = Total Cost / Total Hours
3. Calculation: Cost Per Hour = $6500 / 130 hours
4. Result: Cost Per Hour = $50.
Conclusion: The actual cost per hour for the project ended up being $50 (compared to an implied budget of $5000/100 = $50/hour - in this case, cost per hour stayed the same despite overrun, but total cost and hours increased).
Frequently Asked Questions about Cost Per Hour
1. What is Cost Per Hour?
It's a metric that shows how much expense is incurred for each hour of a process, service, or asset usage. It's calculated by dividing the total cost by the total number of hours.
2. Why is calculating Cost Per Hour useful?
It helps in understanding the efficiency and expense rate of resources (like equipment or labor), assists in setting prices for services, aids in budgeting and forecasting, and allows for cost comparisons.
3. What inputs do I need for this calculator?
You need two basic inputs: the Total Cost incurred and the Total Hours over which that cost occurred.
4. What is the formula used?
The calculator uses the simple formula: Cost Per Hour = Total Cost / Total Hours.
5. Can I use this for labor costs?
Yes, you can use it to find the average cost per hour for an employee or a team by taking their total wages/salaries (and potentially benefits/taxes for a more complete picture) over a period and dividing by the total hours worked in that period.
6. Can I use this for machine operating costs?
Absolutely. Sum up all costs associated with operating the machine over a specific time (e.g., fuel, electricity, maintenance, depreciation) and divide by the total hours the machine was operational during that time.
7. What happens if I enter zero for Total Hours?
Division by zero is not possible. The calculator will show an error message asking you to enter a positive number for Total Hours, as you cannot calculate cost *per hour* if there were no hours.
8. What units should I use?
Use consistent units for cost (e.g., USD, EUR, GBP) and hours (usually just 'hours'). The resulting Cost Per Hour will be in 'Cost Units per Hour' (e.g., $/hour, €/hour).
9. Does "Total Cost" include everything?
What you include in "Total Cost" depends on what you want to calculate. For a simple rate, it might just be labor pay. For a more comprehensive view, it could include overhead, materials, etc. Define your "Total Cost" consistently for meaningful results.
10. Is Cost Per Hour the same as an hourly rate?
An 'hourly rate' is often a set price charged (e.g., a freelancer's advertised rate). 'Cost Per Hour' is usually a calculated metric based on actual expenses over time. While related, they aren't always identical, especially when factoring in variable costs or overhead.
