---
title: "How to calculate the cost of an hour of downtime"
description: "Price an hour of downtime from your own margin, crew and repair costs, with a formula, a worked bottling-line example and the test for when lost output counts."
category: "Downtime and utilization"
author: "Mahmoud Parto"
published: "2024-06-06"
updated: "2026-10-20"
source_url: "https://www.iotflows.com/blog/cost-of-downtime/"
---
> Question: How do I price an hour of downtime in my own plant?

## Key takeaways

- Price a stop as an hourly rate times the hours stopped, plus the one-off costs the stop brings with it.
- Lost margin counts only when the output is gone for good, as on a bottleneck with orders waiting.
- When the crew makes the parts back on overtime, the overtime pay replaces the lost margin and idle crew lines.
- Short stops cost the most per hour, because replacement parts and restart scrap do not shrink with the stop.
- Survey figures such as $2.3 million an hour describe large plants, not your margin, crew or bottleneck.

You price an hour of downtime by adding the margin on the parts you never make, the pay of a crew that can’t work, the repair, and the one-off costs of the stop, such as replacement parts and restart scrap. Which of those count depends on one fact: whether the lost output is gone for good or made back later.

This guide is for plant managers and owners who need a number they can defend. It builds the formula from your own margin and labor, works one bottling line through by hand, and shows why a survey figure from large plants won’t describe yours.

## What an hour of downtime costs

> **Definition.** **Cost of downtime** is the money a plant loses while a machine or line is stopped: the margin on output it never recovers, the pay of people who cannot work, the cost of the repair, and the one-off costs of the stop such as parts, restart scrap and penalties.

*Downtime* is any time a machine is stopped, whatever the reason, as the [glossary entry for downtime](/docs/get-started/glossary/#downtime) defines it. A stop costs money only through what it takes away or adds.

Siemens’ 2024 True Cost of Downtime report counts five elements: lost revenue, wages for staff who can’t work, salaries of the people fixing the problem, emergency replacement parts, and penalties such as contractual compensation.[1] Use the same elements with two changes.

First, count lost margin rather than lost revenue, because you don’t buy material for parts you don’t make. Second, separate the costs that grow with every minute from the ones a stop brings once.

*Contribution margin* per part is the selling price less the costs that vary with each part made: material, direct labor, packaging and energy. Fixed costs stay out of it.

Rent, depreciation and salaried overhead run by the calendar, so a stop doesn’t add to them. It spreads them over fewer parts, which is a separate calculation, covered in [the cost of idle machines](/blog/cost-of-idle-machines/).

| Cost | Grows with minutes stopped? | Where the number comes from |
|---|---|---|
| Lost contribution margin | Yes | Price less variable cost per part |
| Idle crew pay | Yes | Crew size × loaded hourly rate |
| Repair labor | Yes | Technicians × their hourly rate |
| Replacement parts | No, once per stop | Work order or parts invoice |
| Restart scrap | No, once per stop | Scrap logged after the restart |
| Expedite freight and penalties | No, once per stop | Customer contract, freight invoices |

Costs in the first three rows make up the hourly rate. The last three are event costs.

## The downtime cost formula

Price a stop in two parts: an hourly rate for the costs that grow with time, and a fixed amount for the costs the stop brings with it.

**Cost of a stop** = Hourly rate × hours stopped + event costs

**Hourly rate** = Units per hour × margin per unit + idle crew pay + repair labor

Units per hour is the rate the machine or line holds when it runs, not its nameplate speed. For example, a bottling line rated at 150 bottles a minute that holds 120 in practice loses 7,200 bottles an hour, not 9,000.

Use a *loaded labor rate*: wages plus benefits, the full hourly cost of a person to the employer. US manufacturing employers paid $48.62 an hour in total compensation in June 2026, of which $32.50 was wages and salaries.[3] Your own payroll figure is the one to use; the national number is a check on it.

> **Count the crew’s pay only once**
>
> The idle crew line assumes your contribution margin already subtracts direct labor. If your margin is price less material only, drop the idle crew line, because the crew’s pay is already inside that margin.

## Is the output lost or made back?

The largest term in the formula, lost margin, applies only when the parts are gone for good. A stop’s output goes one of three ways, and each one changes what you count.

| What happens to the output | What you count | When it applies |
|---|---|---|
| Lost for good | Margin, idle crew, repair, events | Bottleneck with orders waiting |
| Made back on overtime | Overtime pay, repair, events | Extra hours open, customer can wait |
| Absorbed by spare capacity | Repair, events | Machine catches up in its own hours |

When the crew makes the parts back on overtime, the margin isn’t lost, because the parts still ship. The idle crew line drops out too: you would have paid those hours with or without the stop.

What the stop adds is the extra hours. Under the Fair Labor Standards Act, non-exempt employees earn at least time and a half for hours over 40 in a workweek.[4]

When a machine that isn’t the bottleneck has spare hours, a stop costs its repair and its event costs, because the machine catches up before anyone downstream waits. That changes the moment it starves the [bottleneck](/blog/find-the-bottleneck/), which then loses margin of its own.

> **Which case is this stop?**
>
> Price a stop as lost for good when the machine is the bottleneck and orders are waiting. Price it as made back when the plant can add hours and the customer can wait for the parts. Price it as absorbed only when the machine has idle hours that week and nothing downstream stopped.

## A worked example on a bottling line

#### Worked example: A 90-minute capper fault on a bottling line

- The line holds 120 bottles a minute, 7,200 an hour. It is the plant’s bottleneck, with orders waiting.
- Contribution margin after material, direct labor and packaging: $0.30 a bottle, so 7,200 × $0.30 = $2,160.00 an hour.
- Crew: 5 operators at $48.62 loaded,[3] so $243.10 an hour.
- Repair: 2 technicians at $60.00 loaded, so $120.00 an hour.
- Hourly rate: $2,160.00 + $243.10 + $120.00 = $2,523.10.
- Event costs: a $650 replacement part, plus 300 bottles of restart scrap at $0.40 of material each ($120), so $770.00.
- Stop: 1.5 hours, so 1.5 × $2,523.10 = $3,784.65 before event costs.

**Result:** One 90-minute stop = $3,784.65 + $770.00 = $4,554.65, or $3,036.43 an hour

Now change one fact. Suppose the plant makes the 10,800 lost bottles back on Saturday, with the same 5 operators working 1.5 hours of overtime.

At time and a half on the $32.50 BLS wage,[3] an overtime hour costs $48.75 in wages. The margin and idle crew lines drop out, and the stop costs 5 × 1.5 × $48.75 = $365.63 of overtime, $180.00 of repair and $770.00 of event costs: $1,315.63.

If the line had idle hours that week and caught up without overtime, the same stop would cost $950.00: the repair and the event costs.

Figure: Three bars price one 90-minute stop: $4,554.65 when the output is lost for good, $3,240 of it lost margin; $1,315.63 when the bottles are made back on overtime; and $950.00 when spare capacity absorbs it.

*The same 90-minute stop costs $4,554.65 when the bottles are lost and $950.00 when spare hours absorb it. Sample data.*

The ratio is the point. The same fault on the same line costs nearly five times as much when the line is the bottleneck. Price the stops on your bottleneck first.

## Short stops cost more per hour

Event costs don’t shrink with the stop. A 10-minute stop on the example line with the same $770 of parts and scrap costs $770 + (10 ÷ 60) × $2,523.10 = $1,190.52. That is $7,143.10 an hour, against $3,036.43 an hour for the 90-minute stop.

Figure: A line rises from $770 at zero minutes to $5,816.20 at 120 minutes. A 10-minute stop costs $1,190.52, or $7,143 an hour; a 90-minute stop costs $4,554.65, or $3,036 an hour.

*Every stop on the example line starts at $770 before the first minute, so short stops cost most per hour. Sample data.*

So price each downtime reason per stop, not with one hourly figure for the line. A jam that throws away 300 bottles each time can cost more per minute than a breakdown that runs for an hour.

Short stops are also the first ones a paper log misses, so measure them before you price them. [Micro-stops](/blog/micro-stops/) covers where the cutoff sits and where those stops land in OEE.

## Rank downtime reasons by dollars

A downtime Pareto ranks reasons by hours. Multiply each reason’s hours by its hourly rate, add its event costs, and the order can change. Here is one month on the example line.

| Reason | Hours | Stops | Event cost each | Month cost |
|---|---|---|---|---|
| Changeover overrun | 12 | 20 | None | $28,837.20 |
| Waiting for material | 8 | 10 | None | $19,224.80 |
| Capper jam | 6 | 90 | $120 restart scrap | $25,218.60 |
| Filler breakdown | 4 | 2 | $1,500 in parts | $13,092.40 |

Sample data, from the worked example. The breakdown is priced at $2,523.10 an hour; the other reasons need no technician, so they drop the $120 repair line and cost $2,403.10 an hour. Rows are in order of hours.

By hours, the capper jam ranks third. By dollars, it ranks second, because each of its 90 restarts throws bottles away. The changeover overrun still leads, and all of its cost is hours, with no parts or scrap behind it. Its fix is a procedure, not a part.

Ranked by hours alone, the same list is a [Pareto chart](/docs/get-started/glossary/#pareto-chart). When to rank by hours, by count or by cost is covered in [building a downtime Pareto](/blog/downtime-pareto/#measure).

Planned stops cost capacity too: price them at the same rate when they fall on the bottleneck, then decide which to shorten. Mark those reasons as [planned downtime](/docs/monitoring/downtime-categories/#planned) so they stay apart from breakdowns in every report. [Planned vs unplanned downtime](/blog/planned-vs-unplanned-downtime/) covers which stops belong in each group.

## Why your number won’t match the headlines

Published figures answer different questions, so none of them prices an hour in your plant.

- **Siemens’ 2024 report** puts a lost hour at $36,000 in fast-moving consumer goods and $2.3 million at a large automotive plant.[1] It rests on 181 online interviews with maintenance, engineering and IT staff at large industrial organizations, from April 2019 to March 2023.[1]
- **NIST’s survey of US discrete manufacturers** found unplanned downtime averaged 7.8% of planned production time in 2016.[2] NIST valued the downtime caused by maintenance issues at $18.1 billion, as the labor, energy and capital that sat idle, and counted $100.2 billion of lost sales from delays and defects separately.[2]

Use a published figure to check your order of magnitude, never as an input. A survey of large plants knows nothing about your margin, crew or bottleneck. Before you quote any figure, check who was surveyed, how many, and what the number counts.

## Price downtime from measured stops

The formula needs two inputs from the floor: hours stopped by reason, and the number of stops. A SenseAi sensor on each machine detects every stop in seconds from vibration and sound, with no PLC connection, and operators put a reason on it in a tap. Routine stops, such as short stops and shift starts and ends, can be classified by [automatic rules](/docs/monitoring/auto-downtime-rules/).

The [Downtimes report](/docs/monitoring/downtimes/#pareto) ranks reasons by the hours they cost, by machine and by interval, and exports one row per stop to CSV, which is the input for the table above. Datwyler’s injection molding plant reviews the report week over week and month over month, and cut shift-changeover downtime by 50% in six months, as [Datwyler’s story](/customers/datwyler/) describes. See how it works on [downtime tracking](/solutions/downtime-tracking/).

## Price your first hour this week

1. **Pick the bottleneck.** Start with the machine or line whose stops delay shipments. Its stops are the ones that lose margin.
2. **Get margin per unit from finance.** Ask for contribution margin per part, and ask whether it subtracts direct labor. The answer decides whether the idle crew line belongs in your formula.
3. **Measure the real run rate.** Count units over a full shift of running time and divide by the running hours. Use that rate, not the nameplate speed.
4. **Add crew and repair rates.** Multiply the crew on the line, and the technicians on a typical repair, by their loaded hourly rates.
5. **List event costs by reason.** For each of your top reasons, note the parts and restart scrap one stop costs. Most reasons carry none, and a few carry most of it.
6. **Multiply by a month of stops.** Take the hours and stop counts for each reason from your downtime records, price each reason, and rank them by dollars.

Then use the hourly rate to [price a fix](/blog/reduce-machine-downtime/#levers) before you buy it. For example, a $1,500 spare filler part kept on the shelf pays for itself the first time it saves a 36-minute wait for a delivery on the example line, because 0.6 × $2,523.10 = $1,513.86.

## Questions

### Should fixed overhead go into the cost of downtime?

No, not when you price a stop. Rent, depreciation, insurance and salaried overhead run by the calendar, so a stop adds nothing to them. They answer a different question, what a machine costs to own, and they belong in the shop rate you quote. Adding them to the hourly downtime figure counts the same dollars twice.

### What if I don’t know my contribution margin per part?

Start from price less material and packaging, which purchasing records hold, and leave the idle crew line out, because that margin still contains the crew’s pay. The two methods give nearly the same answer. Replace the estimate with your finance team’s figure when you have it, and ask whether that figure subtracts direct labor.

### Does planned downtime have a cost?

Yes, on a bottleneck. A planned changeover or preventive maintenance job takes hours the line could have run, and on a machine with orders waiting those hours cost margin. Price them with the same hourly rate, then weigh that cost against what skipping the work would cause, such as longer breakdowns or more scrap.

### What is the average cost of downtime per hour?

No average transfers to one plant. A Siemens survey of large industrial organizations reports $36,000 an hour in fast-moving consumer goods and $2.3 million in large automotive plants. Your figure depends on your margin per unit, run rate, crew and whether the machine is the bottleneck, so calculate it with the formula instead.

## Sources

1. [The True Cost of Downtime 2024](https://assets.new.siemens.com/siemens/assets/api/uuid:1b43afb5-2d07-47f7-9eb7-893fe7d0bc59/TCOD-2024_original.pdf), Siemens, accessed Oct 16, 2026
2. [Economics of Manufacturing Machinery Maintenance: A Survey and Analysis of U.S. Costs and Benefits (NIST AMS 100-34)](https://nvlpubs.nist.gov/nistpubs/ams/NIST.AMS.100-34.pdf), National Institute of Standards and Technology, accessed Oct 16, 2026
3. [Employer Costs for Employee Compensation, Table 4: Private industry workers by occupational and industry group, June 2026](https://www.bls.gov/news.release/ecec.t04.htm), U.S. Bureau of Labor Statistics, accessed Oct 16, 2026
4. [Overtime Pay](https://www.dol.gov/agencies/whd/overtime), U.S. Department of Labor, Wage and Hour Division, accessed Oct 16, 2026