Understanding Machine Depreciation

What Depreciation Means

Depreciation is the loss in value of a piece of equipment over time as a result of use and age. A 3D printer you buy for €900 today will not be worth €900 in five years. By then it will be mechanically worn, technically outdated, and approaching the end of its reliable working life. That loss in value is depreciation.

For pricing purposes, depreciation represents the cost of using up your equipment. Every hour the machine runs, it gets slightly closer to the end of its useful life. That wear needs to be recovered through the products you sell.

Why It Must Be in Your Product Prices

If you leave depreciation out of your product costs, your profits are overstated. You appear to be making money, but you are silently consuming your equipment. When the machine finally breaks down or becomes obsolete, you will not have the cash to replace it — because you gave away that cost to your customers at no charge.

Including depreciation in product costs ensures that by the time a machine needs replacing, you have recovered its purchase price through sales.

Straight-Line Depreciation

CrafterBy uses straight-line depreciation, which is the simplest and most common method. The purchase cost (minus any expected residual value at end of life) is divided equally across the machine's useful life.

Formula:

Annual depreciation = (Purchase price - Residual value) / Useful life in years

Example with a Prusa MK4 3D printer:

• Purchase price: €900
• Residual value: €0 (scrapped at end of life)
• Useful life: 4 years

Annual depreciation: €900 / 4 = €225 per year

If you use the printer for 800 hours per year, the depreciation cost per hour of use is:

€225 / 800 = €0.28 per hour

Every product that uses 1 hour of printer time carries €0.28 in depreciation cost, before electricity is added.

Residual Value

Residual value is the amount you expect to receive when you dispose of the machine at the end of its useful life. For most craft equipment this is close to zero — a worn-out laser cutter has little resale value. If you do expect to sell it (e.g., a high-quality industrial sewing machine), enter that estimate.

A higher residual value reduces the annual depreciation charge, because less of the purchase price needs to be recovered through use.

Adjusting Useful Life Estimates

If a machine lasts longer than you expected, edit the machine record and increase the useful life. The hourly depreciation will drop, reflecting that the machine has more productive hours remaining. This is a normal part of managing equipment costs accurately.