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.