How to calculate the cost of an hour of downtime

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#

Downtime is any time a machine is stopped, whatever the reason, as the glossary entry for 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.

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.

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.

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.

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, which then loses margin of its own.

A worked example on a bottling line#

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.

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.

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 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.

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. When to rank by hours, by count or by cost is covered in building a downtime Pareto.

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 so they stay apart from breakdowns in every report. 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.

The Downtimes report 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 describes. See how it works on 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 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.