How to Calculate Electricity Cost (Simple Formula and Examples)
By Shihab Mia July 6, 2026 5 min read
Quick answer
To calculate electricity cost, use cost = kilowatt-hours (kWh) used x your rate per kWh. Find kWh by taking a device's watts, dividing by 1000, then multiplying by the hours you run it. So daily cost = watts / 1000 x hours per day x rate. Multiply by 30 for a month and 365 for a year. Example: a 1500 W heater run 3 hours a day at 0.15 dollars per kWh uses 4.5 kWh a day and costs about 0.68 dollars a day, roughly 20 dollars a month.
Your electricity bill can feel like a black box, but the math behind it is genuinely simple. Once you know a device's wattage and your rate per kilowatt-hour, you can price out exactly what anything costs to run: a space heater, an old fridge, a gaming PC, or every light in the house. This guide walks through the formula, gives you worked examples, and hands you a reference chart so you never have to guess again.
The electricity cost formula
Electricity is billed by energy consumed, measured in kilowatt-hours (kWh). One kWh is the energy used by a 1000 watt device running for one hour. Everything flows from that single idea.
The full formula has two steps. First find the energy used, then multiply by your rate:
- Energy (kWh) = watts / 1000 x hours used
- Cost = energy (kWh) x rate per kWh
Combined into one line, daily cost = watts / 1000 x hours per day x rate per kWh. To scale it up, multiply the daily figure by 30 for a monthly estimate and by 365 for a yearly estimate. That is the entire method, and it works for any appliance in the world.
Where to find each number
- Watts: Check the label on the device, the power brick, or the manual. If it lists volts and amps instead, multiply them (volts x amps = watts).
- Hours: Estimate honestly how long the device actually runs each day, not how long it is plugged in.
- Rate per kWh: Look at your electricity bill. It is usually shown as a price per kWh. In the US the average residential rate is around 16 cents per kWh according to the US Energy Information Administration (EIA), but yours may be higher or lower.
Worked example: a space heater
Say you run a 1500 watt space heater for 3 hours every evening, and your rate is 0.15 dollars per kWh. Here is the calculation step by step.
- Convert watts to kilowatts: 1500 / 1000 = 1.5 kW.
- Find daily energy: 1.5 kW x 3 hours = 4.5 kWh per day.
- Find daily cost: 4.5 kWh x 0.15 = 0.675, so about 0.68 dollars per day.
- Scale to a month: 0.675 x 30 = about 20 dollars per month.
- Scale to a year: 0.675 x 365 = about 246 dollars per year.
That is the power of running the numbers: a heater that feels cheap by the hour turns into a real line item over a winter. If you want to skip the arithmetic, our electricity cost calculator does all five steps instantly, and for other running costs like driving you can try the gas cost calculator.
Appliance cost reference chart
The table below shows typical wattages and what common appliances cost to run at a rate of 0.16 dollars per kWh (near the US average). Multiply the daily cost by your own usage hours and rate to fine-tune it.
Estimated running costs at 0.16 dollars per kWh
| Appliance | Typical watts | Hours per day | kWh per day | Cost per day | Cost per month |
|---|---|---|---|---|---|
| LED light bulb | 10 | 5 | 0.05 | 0.01 dollars | 0.24 dollars |
| Laptop | 50 | 6 | 0.30 | 0.05 dollars | 1.44 dollars |
| Refrigerator | 150 | 24 | 3.60 | 0.58 dollars | 17.28 dollars |
| Window air conditioner | 1000 | 8 | 8.00 | 1.28 dollars | 38.40 dollars |
| Space heater | 1500 | 3 | 4.50 | 0.72 dollars | 21.60 dollars |
| Clothes dryer | 3000 | 1 | 3.00 | 0.48 dollars | 14.40 dollars |
Notice that a small light bulb costs pennies while a heater or air conditioner dominates the bill. High-wattage devices that run for long stretches are always where the money goes, which is exactly where trimming usage pays off most.
How do I read the rate on my bill?
Look for a line labeled price per kWh, energy charge, or supply rate on your electricity bill. That number, in dollars or cents per kilowatt-hour, is the rate you plug into the formula. If your bill only shows a total, divide the total energy charge by the kWh used.
Be aware that many bills add extra fees on top of the energy rate, such as delivery charges, taxes, and a fixed monthly service fee. Some plans also use tiered or time-of-use pricing, where the rate changes based on how much you use or the time of day. For a precise per-appliance estimate, use your blended rate: total bill divided by total kWh.
Common mistakes to avoid
- Forgetting to divide by 1000. Watts must become kilowatts before you multiply by the rate. Skipping this makes your estimate 1000 times too high.
- Using plugged-in time instead of running time. A fridge cycles on and off, and a heater with a thermostat does not draw full power every minute. Use realistic active hours.
- Ignoring the fixed fees. The energy rate is not your whole bill. Fixed service charges and taxes mean your total will be higher than the pure kWh math suggests.
- Assuming the label wattage is constant. Many devices list a maximum wattage they rarely hit. For heating and cooling especially, real usage is often lower.
- Mixing up rate units. If your rate is listed in cents, convert to dollars (16 cents = 0.16 dollars) before multiplying.
Good to know: quick shortcuts
A handy mental shortcut: a 1000 watt device run for 1 hour uses exactly 1 kWh, which costs whatever your rate is. So a 1500 watt device for 1 hour costs 1.5 times your rate, and a 500 watt device for 2 hours also costs 1 times your rate. Anchoring to the 1 kW per hour rule lets you eyeball most costs without a calculator.
If you are comfortable with basic multiplication, this is the same skill you use for other everyday math like working out how to calculate percentage discounts or figuring how to calculate square feet for a room. The formula never changes, only the numbers you feed it.
watt Try the free tool Electricity Cost Calculator Free electricity cost calculator: enter watts, hours per day, and your rate per kWh to see energy used and the cost per day, month, and year for any appliance.Electricity cost really is just kWh times your rate, and once that clicks you can price out any device in your home in under a minute. Grab the wattage, estimate the hours, pull your rate off the bill, and the rest is simple multiplication. Do it once for your biggest energy users and you will know exactly where your money is going, and where cutting back will actually make a difference.