Operating costs

[TheMan419]

Oh great brain trust.....

We own a NH Boomer 24. We are building a horse barn. My wife trains horses. So we will have at most 10 horses on our property.

I am trying to figure out what we should charge for board.

One variable I cannot find a cost on is the cost per hour to operate the tractor. Anyone have any idea? Sort of like I you drive your car for work the IRS assumes it costs you 57 cents a mile or whatever.

Thanks for any insight!

 

[Gary Fowler]

Cost per hour is dependent on usage, depreciation, insurance, fuel and maintenance. There is really no way to predict repair cost accurately. The rest can be how you depreciate it for your taxes you may take a 10 year rate or less and then divide the cost by 10 for yearly then divide that by the expected hours per year. Add in insurance cost (if you plan to insure it), fuel per hour cost (your fuel usage per hour at PTO rated speed should be in the operators manual) and lastly maintenance (oil & filters, grease etc) The biggest unknown is how much you need to set aside as repair cost. This is basically unknown since some tractors might go 10,000 hours without a breakdown while others might not make 2000. This is an estimate that you may want to throw in.

I am sure the example given for 57 cents per mile for an auto does not include any repair cost, just purchase, maintenance ( fuel, oil, tires ) and insurance. based on an average lifespan of the car. This is not quite as well defined for tractors.

I am sure if you googled it someone would have a spreadsheet that would help you.

 

[jeff9366]

Last year I sold my Kubota B3300 SU (33-hp) after 407 hours. Depreciation, the difference between my purchase price and selling prices, was $4,000, so DEPRECIATION was $9.83 per operating hour.

Kubota KTAC insurance was $2.00 per operating hour. (One covered repair ~ I paid $250 deductible.)

Fuel use averaged .3 gallons of diesel per hour.

Less my time, less implements, I would estimate my tractor operating cost was around $22/hour.



Kubota dealer performed all service, including pick up and return. Labor rate for Kubota mechanic = $70 per hour.


Bottom line: I think it reasonable to bill your tractor initially at $50 per hour.

Review your actual costs annually and adjust higher if necessary.

I am retired so I do not keep detailed records of my costs.

 

[4570Man]

Last year I sold my Kubota B3300 SU (33-hp) after 407 hours. Depreciation, the difference between my purchase price and selling prices, was $4,000, so DEPRECIATION was $9.83 per operating hour. Kubota KTAC insurance was $2.00 per operating hour. (One covered repair ~ I paid $250 deductible.) Fuel use averaged .3 gallons of diesel per hour. Dealer service, including dealer transport, additional. Implements additional. Your time, additional.

The operating cost would be less if you used it more hours,

 

[smstonypoint]

Oh great brain trust.....

We own a NH Boomer 24. We are building a horse barn. My wife trains horses. So we will have at most 10 horses on our property.

I am trying to figure out what we should charge for board.

One variable I cannot find a cost on is the cost per hour to operate the tractor. Anyone have any idea? Sort of like I you drive your car for work the IRS assumes it costs you 57 cents a mile or whatever.

Thanks for any insight!

Agricultural economics departments at the various land-grants publish procedures for estimating operating (variable) and ownership (fixed) costs for tractors. Here's an an example from Iowa State: https://www.extension.iastate.edu/agdm/crops/html/a3-29.html.

The University of Illinois has a neat online calculator at farmdoc - Management: Machinery Cost Estimates. Unfortunately for you, that calculator is tailored for utility and larger tractors,

Steve

 

[joeu235]

A simple and fairly accurate method to get equipment operating cost is to use the local long term rental rate of a similar piece of equipment.

Sunbelt Rentals will rent a 65Hp tractor for 4 weeks @ $500 / week.
Subtract out 15% for Sunbelt overhead and 15% for Sunbelt profit = $380 per week.
Assuming 40 hours per week of running, Sunbelt thinks it costs them $9.60 per hour + fuel to run the tractor.

 

[smstonypoint]

The operating cost would be less if you used it more hours,

Operating costs (fuel, labor, lubrication, allowance for repairs, etc.) are variable and increase with hours of operation.

Ownership costs are fixed per time period (e.g., a year) and decline on a per hour basis as hours of operation increase during the time period.

Steve

 

[TheMan419]

Thanks guys! Couple different ways to get at the info I want provided!

 

[fishheadbob]

I think you should look at the cost of board in a different way. What does the competition charge ? Are you providing a Ritz Carlton stable, or just a bare bones barn ? If similar barns charge $Y per animal, you probably don't want to charge Y times 2, nor do you want to charge 50% of Y for a like experience. At the same time you don't want to lose money for the pleasure of shoveling manure. If you see that the competition gets $400 per animal per month, you have to look at your expenses and your time to see whether it's worth doing. Feed, insurance, equipment, labor, electricity, etc. etc. are all factors to plug into your equation.

 

[GManBart]

Depreciation on the LS I sold was right about $10/hr as well. I had routine service, fuel and two minor repairs (bent stabilizer bar, and a linkage). If you add in all of that, it was probably still only $20/hr on the outside.