A rate equation of the microchip laser based on a quasi-three level system is proposed, which has taken the fluorescence concentration quenching and the Boltzmann distribution resulted from thermal effect into account This rate equation is applied to Yb3+:YAl3(BO3)4 microchip laser, and the comparison of the calculated and experimental results shows that this equation is valid to a certain extent Finally, some schemes about the optimization of the Yb3* concentration and the crystal thickness of the Yb3+:YAl3(BO3)4 microchip laser are given.