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

[eyi]

As for finance let’s not forget 15 K in 10 years is worth how much with inflation, interest rates ?

 

[Carl_NH]

As for finance let’s not forget 15 K in 10 years is worth how much with inflation, interest rates ?

Time value of money, nor ROI was a consideration in buying a tractor - it was more I need these attributes in a machine to do these tasks, and maybe others I had not considered - as a tractor is an "active" investment that generates multiple returns over its useful life.

Now, I do analyze other investments, like installing solar, or a 90% efficient boiler which are "passive investments" meaning once you make them, they produce x savings over time no matter how you use them.

 

[cathy liebchen]

We never consider the cost to own. Need tractor and use it often. Certainly cheaper than trying to find someone else to do these things, esp. since no one wants to work or has time to do it

 

[grsthegreat]

honestly...who cares. worth every penny. i just unloaded wifes pallet of steer manure using tractor and forks. Priceless.

 

[beowulf]

The cost of ownership is one thing - but the value of owning a tractor is priceless.

 

[scaredychicken]

Can I deduct the tractors as a medical expense? physical therapy? I feel much better after spending a few hours in the seat, so much more effective than the chronic pain scripts I'm on.

get a chicken or two, sell eggs, then write off the tractor as a business expense


my tractor saves me a lot of time, work, effort, and it does all the heavy lifting and snow removal

 

[Raul-02]

and you get your true cost of ownership. Is that about right?

Ummm that all depends. I don't care about the cost in dollars.
I am reaping the benefits of having a honkin' big powerful machine that makes short work of tasks that in years past took me weeks, even months and took incalculable physical energy that I had to reach deep to find.

 

[coobie]

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..

Now thats FUNNY.."Like a John Deere "IMHO this day in age MOST tractor brands hold their value.To your original question I don't care what the value is at the end I look how many times my tractor saved my old A$$ from doing hard crap....Can't put a price on that now can you..

 

[Jstpssng]

Now thats FUNNY.."Like a John Deere "IMHO this day in age MOST tractor brands hold their value.To your original question I don't care what the value is at the end I look how many times my tractor saved my old A$$ from doing hard crap....Can't put a price on that now can you..

Just my opinion, yet I believe that LS will probably hold it's value the longest. Right now they are underpriced and as they become a more trustworthy brand, that increased value will offset the depreciation.

 

[coobie]

Just my opinion, yet I believe that LS will probably hold it's value the longest. Right now they are underpriced and as they become a more trustworthy brand, that increased value will offset the depreciation.

Kioti was like LS back in 2008 hell of a value IMHO..

 

[Jstpssng]

Kioti was like LS back in 2008 hell of a value IMHO..

I agree.
You also could say the same about Kubota when my father bought his L245, back around 1978.
From what I've seen, I believe that LS is a pretty solid tractor.

 

[ArlyA]

honestly...who cares. worth every penny. i just unloaded wifes pallet of steer manure using tractor and forks. Priceless.

I agree. If you have some job to do and you own a tractor that can do it and it gets done, then what was the value to you? Having the tool to do X,Y or Z has value to us...

 

[4570Man]

How much does it matter? Are you going to grab a shovel and get the job done cheaper?

 

[Carl_NH]

Where's JohnThomas, he should be an expert on this topic!

He has to be one of the most prolific (Kubota) tractor/implement buyers on TBN with something like 20 machines in 12-14 years!

I agree also on LS - they are a good value machine.

 

[hornett22]

Who cares? It's completely useless information

 

[Reddogs]

i need coffee first

I understand the hypothetical question, but there are so many variables.

the basics are nicely noted in the OP post, and it is well thought out. I don't think that a tractor's usefulness / residual / terminal / salvage value is typically considered after only 10 years ... 30-40 yrs perhaps

resale / trade-in value is another matter, especially in the case of re-purchases

part of the cost / value of ownership, is the usefulness itself - what has the tractor (and implements ?) allowed you to accomplish in those 10 years ? ... property maintenance, development, construction ...

then there are the write-offs / tax credits that one would get every year - assuming that there is a method to apply these credits (business, farming etc)

what I would consider in the the value of the tractor itself after 10 years (if I was buying a 10 year old tractor) - overall condition, maintenance, hours, tire tread etc

I just bought a 10 yr old Zero Turn riding mower, for $2000 Cdn. It's a Cub Cadet RZT-S50 that originally sold for about $2800 USD. It has 320 hrs on it. I know that I got a decent deal on it, the newer similar ones are about $7500. If I were to sell that same unit tomorrow, I'd be asking $4000 Cdn

Well, there should be a inflation index to put into the calculation to show what you really make at the end, I think there are some out there.

 

[Reddogs]

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.

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..

 

[NEPA guy]

You can also figure in how much money is saved by doing jobs ourselves vs hiring someone else. Apply that in the TCO and its a no brainer.

 

[mikedodd]

...what is the true cost of ownership?

Bottom line: My wife and I don't care. We were using a Troy-Bilt walk-behind tiller with a front blade to shove gravel into potholes in a chip-and-tar subdivision road. A neighbor was using a Kubota BX2360 with a FEL. We looked at each other and said, "We need one of those!"

Our only question was, can we afford it? We could, and bought one in 2011. It has been so useful for all sorts of things that we can't imagine not having it.

We consider the price of the tractor a sunk cost, not something to be amortized over time. If ever we decide we don't need it, we'll sell it and, as others have pointed out, we'll consider the money a windfall.

--- Mike

 

[rScotty]

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?

The OP says, "Is that about right?"

I'd say it is partly right but incomplete. Doesn't that seem a lopsided way to figure out the value of anything?
Ask yourself what should you be putting on the other side to more nearly balance the scales.

All you've got so far are imaginary dollar figures for the expenditure side. It would be more correct if the expenditures were compared to equally imaginary dollar figures on the benefit side.

It's good as far as it goes, but just needs completing.

rScotty