Preheated (hot) machining was found to enhance the machinability of the AISI D2 tool steel, for instance, longer tool life and lower surface roughness were obtained. For preheated machining (PHM) to be more preferred than room temperature machining (RTM), it has to be economically more attractive –besides being better in the context of machinability–. In this research, a thorough investigation was conducted to determine the conditions under which; PHM would yield lower machining cost. The conditions under which; RTM would yield lower machining cost were determined as well. User-friendly and accurate mathematical models to estimate the cost of machining in terms of the machining parameters were developed. This research work is particularly useful for metal cutting industries, as well as industrial engineering students.