How much will that tractor cost, the true price of ownership.

[Hermio]

Ok, you bought the tractor with a FEL and you want to figure out what is the true cost of ownership. Lets take a small tractor like the John Deere 3025D and figure the total ownership costs for it, which was sold new for around $18k before the pandemic but now has gone up to $25k. You have to calculate the fixed costs such as depreciation, taxes, insurance, and tractor housing, so lets do a 10 year look, with tractor use of around 100 hours per year (since its a small tractor). So you determine the residual value or the salvage value you expect to receive by selling the equipment at the end of the equipment's useful life. For this example, we will assume that the residual value of the equipment is $10,000. Subtract the residual value $10,000 from the original cost $25,000 and you get 15,000, and divide that by 10 years and it depreciates $1500 a year. Now just add in your insurance, taxes and housing plus fuel and maintenance and you get your true cost of ownership. Is that about right?

you actually need to include the time value and inflation effects to give a true cost of ownership in today's dollars. For example, that $10K residual 10 years from now might be worth only 5K in today's dollars.

 

[Hermio]

Why are you only focusing on cost. Where is the benefits to the equation that then result in a net value.

In your little example, it costs 1,500, but the benefit might bring in 5k. So the tractor never actually cost you anything. Even with inflation, your ahead.

In business we have formulas to determine these things and every one of them weight the costs vs the benefits to get to a net value.

5k is the top line. 1.5k is the cost. Cost and benefit are two different things. From a business viewpoint, benefit must exceed cost to make sense. For a homeowner, the benefits are not always monetary. For example, I bought a Stihl MS500i chainsaw to cut about 6 cords of firewood per year. Is this a rather expensive saw for just cutting firewood? Yes, it is. But it lets me get the job done faster, and it is a joy to use.

 

[CaptFerd]

One of the most ridiculous things I see a lot are people do is mow grass on a compact tractor with the belly mower and a front end bucket up in their face. The loader is a mere toy that they will use for the first year and becomes useless over time. The buckets still look brand new after 10 years so at least that part will maintain some value.

 

[ArlyA]

We care for trails and people always tell us "You must use volunteers" or "the Boy scouts to do that!" neither of which is acruate or practical. We end up buying tools to get X,Y,Z jobs done and I'd like to own a compact tracotor to get more done without trying to pull in volunteers which is more work than is worth.

 

[Snobdds]

Finding out what was brought in by just that tractor can be a bit tricky, take for example my case, I have a JD and a Kubota, so which one did I use more and how do I track that and how much did it benefit me....not so simple..

Sure it's simple, don't make it hard. Don't bog yourself down with trivial details like what tractor moved more gravel in a pile? The pile is gone and your benefit is not having to pay someone else to do it. If you have two tractors, you must have enough work for two. You just have to apply the benefits over two costs. Simple.

 

[Snobdds]

5k is the top line. 1.5k is the cost. Cost and benefit are two different things. From a business viewpoint, benefit must exceed cost to make sense. For a homeowner, the benefits are not always monetary. For example, I bought a Stihl MS500i chainsaw to cut about 6 cords of firewood per year. Is this a rather expensive saw for just cutting firewood? Yes, it is. But it lets me get the job done faster, and it is a joy to use.

yes they are monetary, in the fact you didn't have to pay someone to do it for you. Saving money is a benefit in every part of the country I've visited, hopefully it is in Ohio too.

You're stihl story is a non sequitur.

 

[LS Tractor Owner]

Just in the past 4 years, if I totaled all the projects / tasks that were done using the tractor VS hiring a contractor for the same projects, my tractor has been paid for, plus some. It is a calculated, tangible amount.

How can one put a 'value' on doing something yourself? Yes it can be compared monetarily, but that is not true value. That comes with the satisfaction of doing the job right, knowing how / where / why things were done, and having 'fun' on the tractor while doing the projects.

I don't consider what the cost of ownership is, only the value of ownership. If I just move one pile of dirt with the tractor VS moving it with a wheel barrel, well that's value.

 

[HAR]

Once you figure out that you not only want a tractor but need one, unless you are using it for a business, all that goes out the door. Like many have said: "You cannot put a price on the work that you have done with your tractor or the enjoyment that you got from doing those jobs yourself." Also, as has been pointed out, having that tool in your tool box now that you are able to use it at the drop of a hat is worth far more than not having the tool and having to hire the job done on someone elses time and rate schedule. How many times have we come to someones rescue because we had the proper tool to do a job.

Knowing what I paid for my tractor and implements about 20 years ago, and just now looking at what the current used value is on the same make/model today, it is all a no brainer. I am so far ahead, it makes any thought of accounting a waste of time. As others have pointed out, yeah, I do keep a record of my 'maintenance' costs, but it is only for my use, not to determine what I have invested. Maintenance should not be considered a cost, but an investment in maintaining future value. I figure, if I should ever want to sell, I would at least have sort of a maintenance record to pass along.

 

[Hermio]

yes they are monetary, in the fact you didn't have to pay someone to do it for you. Saving money is a benefit in every part of the country I've visited, hopefully it is in Ohio too.

You're stihl story is a non sequitur.

I don't think you know the meaning of "non sequitur" It means "it does not follow", which would only make sense if a logical assertion were being made, which was not the case. My chainsaw example was just an example of how not all purchases are made based on monetary benefit. Sometimes they are based on enjoyment.

 

[Hermio]

One of the most ridiculous things I see a lot are people do is mow grass on a compact tractor with the belly mower and a front end bucket up in their face. The loader is a mere toy that they will use for the first year and becomes useless over time. The buckets still look brand new after 10 years so at least that part will maintain some value.

I used to have a Kubota B7100 HST 4wd that I used with a rear mower to mow my lawn. I also used it with a brush cutter to mow fields and trails. I used my FEL to shove trees out of the way on trails, to load manure, and as a portable 550#crane with an 8' high reach. In short, I used all of its capabilities on a regular basis. But it was a crappy lawn mower. I now mow with a ZTR; it gets the job done in 1/3 of the time. I use a Mahindra 5035 HST now for my tractor tasks, including logging 4000# logs. I found that while a tractor is versatile, it is not the best machine for mowing lawns.

 

[Snobdds]

I don't think you know the meaning of "non sequitur" It means "it does not follow", which would only make sense if a logical assertion were being made, which was not the case. My chainsaw example was just an example of how not all purchases are made based on monetary benefit. Sometimes they are based on enjoyment.

How is a chainsaw that is only marginally more expensive than other chainsaws used for firewood a good example of cost/benefit of a tractor purchase that far exceeds the $200 you paid for a better chain saw.

A non sequitur was the most pleasant term I could find that didn't insult the horrible example of two random things trying to be linked to make a point.

Now if you said you purchaed a small sub compact tractor in lieu of a small rider for your acre of land to mow because it brings you joy...that would be a better point.

 

[meackerman]

maybe I'm missing something, but the true cost of ownership has never entered my mind for my tractor.

I know it allows me to do stuff that I wouldn't do otherwise, and makes things I could do manually, easier.

 

[Hermio]

How is a chainsaw that is only marginally more expensive than other chainsaws used for firewood a good example of cost/benefit of a tractor purchase that far exceeds the $200 you paid for a better chain saw.

A non sequitur was the most pleasant term I could find that didn't insult the horrible example of two random things trying to be linked to make a point.

Now if you said you purchaed a small sub compact tractor in lieu of a small rider for your acre of land to mow because it brings you joy...that would be a better point.

I can buy a chainsaw that is adequate to cut 6 cords of firewood per year for less than $500. The MS500i goes for well over double that. Since I do not sell firewood, the extra cost is not based on economic grounds. The point applies regardless of product type. And you still used "non sequitur" incorrectly. If you wanted to say I used a bad example, I might not agree with you, but at least you would be correct from a word usage standpoint.

 

[FERLING]

I probably will never sell my 2 tractors. My kids can figure that out after I am gone.

WorkMaster tractors do hook you for the lifetime experience. I feel same way about my WorkMaster 50.

 

[FERLING]

My true cost of ownership is the shear joy, work and satisfaction of jobs completed that I have accomplished with my tractor. I have done thousands of dollars worth of work with my tractor over the last 16 years that have more than paid for the tractor. Only at 700 hours now and running strong.

Tree fell over on the driveway last weekend. It is shared by 5 houses. Went out with the grapple and moved all of it. Neighbors were happy and grateful. Money cannot buy that type of satisfaction for me. I live for the tree over the driveway!!!

Like my wife says "You really love that tractor!!!". Yes, yes I do.

Mine lowers my blood pressure by 20 points when using it. Best medicine with no side affects.

 

[DaBear3428]

One of the most ridiculous things I see a lot are people do is mow grass on a compact tractor with the belly mower and a front end bucket up in their face. The loader is a mere toy that they will use for the first year and becomes useless over time. The buckets still look brand new after 10 years so at least that part will maintain some value.

huh? that really depends on the "people" you are talking about. I see lots of people work the hell out of a SCUT or CUT FEL to the point that the belly mower is the toy.

 

[Jstpssng]

huh? that really depends on the "people" you are talking about. I see lots of people work the hell out of a SCUT or CUT FEL to the point that the belly mower is the toy.

Absolutely! It's all in what you want it for. The owner of a motel I used to frequent had a little Ford LGT with a bucket, and he used that constantly. It may not have held much but didn't destroy the lawn as he hauled mulch or whatever to do the landscaping. Plus he mowed his lawn with it.

 

[mgstevens]

I ran a quick version of the Cost of Ownership on my little unit. Bought from a very light use original owner at 10 years old - @ 400 hrs - for 13K. Could sell today for at least 15K. But with the attachments, more like $20-25K. I put approx. 50 hrs/year so far, using for snow-clearing and landscaping projects. In any event, the economics appear to be paying me for every hour of usage. Not sure how much, but even if it covers fuel and filters and fluids, I get a super tool to use for free!

 

[Johnb0311]

Ok, you bought the tractor with a FEL and you want to figure out what is the true cost of ownership. Lets take a small tractor like the John Deere 3025D and figure the total ownership costs for it, which was sold new for around $18k before the pandemic but now has gone up to $25k. You have to calculate the fixed costs such as depreciation, taxes, insurance, and tractor housing, so lets do a 10 year look, with tractor use of around 100 hours per year (since its a small tractor). So you determine the residual value or the salvage value you expect to receive by selling the equipment at the end of the equipment's useful life. For this example, we will assume that the residual value of the equipment is $10,000. Subtract the residual value $10,000 from the original cost $25,000 and you get 15,000, and divide that by 10 years and it depreciates $1500 a year. Now just add in your insurance, taxes and housing plus fuel and maintenance and you get your true cost of ownership. Is that about right?

How could you ever sell that old gal you grew up with over 70 years ago? And she seems to run better than me. LOL

 

[bvanek]

Thats why you get a tractor like the John Deere, or similar that hold their value, with low depreciation and good residual value. In this case a 3025D with a FEL with 10 years/1000 hrs will sell for much more than $10,000, so you get greater value for your money than lets say a comparable Bad Boy or Branson tractor..

I suspect a reputation or a familiar name might get more interest, but market value alone doesn't consummate a purchase for a potential buyer. In this day and age with assembly, parts, and materials all potentially being compromised with outsourcing you never know where that part is made or what steel and iron has been "thinned" with alloys that may reduce weight but also might be simply striking a balance for cost. Electronics/computer chips are replacing older conventional methods of operating a machine, it's also the most heavily outsourced material. So with more and more pollution controls integrated into how a tractor runs and performs it can give you fits if you depend on your tractor to survive.

When I went looking for a tractor with more HP. I looked at all the big name brands, but settled on a Kioti. I chose it for a competitive price, limited computer components, and simplicity. The two selling points were the warranty and the Daedong engine. Also the heavy, beefy construction when compared to more flimsy Kubota, and John Deer. There were other factors but these were the main considerations. Also I realize many components are outsourced but the Kioti USA assembly and distribution centers are centralized in North Carolina and this gives some local accountability.

Many don't know the history of the Daedong engine made in S. Korea. Kubota used these engines for decades and was a huge part of their success. Eventually this working agreement ended and am not sure who makes Kubota engines today? I also trusted the dealership as I had dealt with them on other equipment prior.

My point is that John Deer has had a longstanding good reputation, but today that reputation is subject to how well they support their product and how much demand they put on their upstream suppliers. Does a reputation instantly add value up front?....I suppose it does to some, but most field owners look much deeper into what they purchase.