Equipment Depreciation Calculator
Spread the cost of every machine and tool over its useful life — get per-day, per-job, and per-area depreciation figures to bake into your overheads.
Spread Equipment Cost Across Days, Jobs, and Floor Area
Every piece of equipment you own — grinder, vacuum, mower, trailer, drill set — is silently losing value as you use it. This calculator spreads that loss across your working days, jobs, and floor area so you can bake it into your pricing. Uses straight-line depreciation: (Purchase – Salvage) ÷ Useful Life ÷ Working Days. Add a row for each piece of gear and read the totals.
Your Business Volume
How much work you do in a year — drives the denominators for each output.
Your Equipment
Three columns, one formula per row: (Purchase – Salvage) ÷ Life = Annual depreciation. The total row spreads the combined annual across your working days, jobs, and floor area. Lease payments belong in the Fixed Cost Spreader instead.
- Grinder $8,000 new, sells for $1,500 after 7 years → Purchase
8000· Salvage1500· Life7= $928.57 / yr - Vacuum $3,500 new, sells for $500 after 7 years → Purchase
3500· Salvage500· Life7= $428.57 / yr - Hand tool budget $2,000, thrown out after 4 years → Purchase
2000· Salvage0· Life4= $500.00 / yr
Enter your equipment purchase prices above to see the per-day, per-job, and per-ft² spread.
Straight-line depreciation only — close enough for pricing. Vehicles are better priced per km/mile via the Vehicle Operating Cost Calculator. For leased equipment, use the Fixed Cost Spreader Calculator with the monthly lease payment.
How the Equipment Depreciation Calculator Works
- Set your business volume — working days per week, weeks worked per year, jobs per year, and your typical area per job (m² or ft²).
- Add a row for each piece of equipment — name it, enter the purchase price, the salvage value you'll get when you sell or scrap it (set 0 if you'll throw it out), and the years of useful life you expect.
- The calculator computes the annual depreciation per line ((Purchase – Salvage) ÷ Life) and spreads it across days, jobs, and area below.
- Read the grand totals — that's your combined equipment depreciation burden per day, per job, and per area.
- Use the per-day total to set the "Equipment & Tool Replacement" overhead amount on your Business Profile. Per-job and per-area figures are there for contractors who quote in those units.
Examples
Frequently Asked Questions
What is straight-line depreciation?
It's the simplest depreciation method: take the cost of the asset, subtract whatever you expect to get back when you sell or scrap it (salvage value), then divide by the number of years you'll use it. The result is a flat annual cost that you can spread across your work. (Purchase – Salvage) ÷ Useful Life.
What should I use for "salvage value"?
Be realistic. For a grinder you'll sell second-hand, expect 15–25% of purchase price. For hand tools you'll throw out, use 0. For vehicles, used-market value at the end of your hold period. If unsure, use 0 — that just makes the per-day figure slightly higher (more conservative).
How long is "useful life"?
Useful life is how long YOU'll use the asset before replacing it, not how long it could theoretically last. Common rules of thumb: heavy machinery 7–10 yrs, vacuums 6–8 yrs, hand tools 3–5 yrs, batteries/chargers 3 yrs, trailers 10–15 yrs, vehicles 5–8 yrs. Adjust for your usage intensity.
Should I include my vehicle here or in Travel Rate?
In Travel Rate — vehicles are best priced per km/mile because their depreciation genuinely scales with distance driven. Use the Vehicle Operating Cost Calculator to derive that figure. This calculator is for gear that depreciates on a calendar timeline regardless of how many jobs you do.
What about ATO/IRS tax depreciation rates?
Tax depreciation rates exist for filing your tax return, but they're not always realistic for pricing purposes. This calculator is for pricing — what does the gear ACTUALLY cost you per day of work? Use whatever useful-life figure reflects reality. Your accountant handles the tax filing side separately.
Should I depreciate leased equipment too?
No — lease payments are already a recurring fixed cost. Enter those in the Fixed Cost Spreader Calculator instead (under "Equipment Lease"). This calculator is only for equipment you OWN outright.
How accurate does it need to be?
Order-of-magnitude accuracy is fine. The point is to stop treating depreciation as $0 — most contractors do, and it silently eats into their margin. Even a rough number (e.g. $5–10/day) is infinitely better than ignoring it. Revise once a year when you buy or retire a major piece.
Important Notes
- Straight-line method: Annual Depreciation = (Purchase Price – Salvage Value) ÷ Useful Life (years).
- Working days per year = days per week × weeks worked per year.
- Per-area output uses jobs per year × typical area per job to estimate annual area covered.
- Set salvage to 0 if you plan to scrap or give the asset away at end of life — produces a more conservative (higher) per-day figure.
- Vehicle depreciation is better handled in the Vehicle Operating Cost Calculator because it scales with distance, not calendar time.
- Re-run when you buy a major new piece of equipment, or annually as part of your pricing review.