Tractor work pricing per hour

[Phillip w]

I have to kind of agree with rustyshakelford and ld1. Dozer work around here gets about 100-125 dollars per hour. You are not a dozer. A tractor rental place gets 45 dollars an hour or 250 for the day to rent their tractor. My heating/air and plumbing guy cbarges a 55 dollar service call and 55 dollars an hour for the job. If he has to use his ditch witch he charger 85 dollars an hour. I would play the numbers in your head, factoring in a show up fee and an hourly rate. Then estimate hour long the job will take. The give an estimate based on you calculations for the entireh job. I agree looks like the best way to do it.

 

[LD1]

I find that bidding the job works way better. People tend to get upset with an hourly rate especially if it's more than they make. You're about to hear a bunch of ridiculous prices for how much it cost to operate a tractor. I had a L3240 that I bought used with loader, grapple, backhoe. I used it 700 hours and sold it for what I had in it. The local rental places weekly rate on the biggest CTL they've got and a 50 series mini ex was somewhere around $40 an hour. Both of those pieces cost more to buy and maintain than a tractor. At a 40 dollar an hour operating cost my machine would have deprecated to a negative amount as 40x700=28000 and I didn't sell my machine for that much.

I put together a spreadsheet to figure my hourly cost.

For example:
HST filter cost $78 and needs changed every 200hrs.......................thats $0.39/hr
Trans, air, and fuel filter cost $90 every 400hrs.......................................$0.225/hr
Engine oil and filter.....$55..........200hrs ...............................................$0.275/hr
Super UDT oil............$150.........400hrs................................................$0.375/hr
Front tires ...........$400.........they last 1000hrs......................................$0.40/hr
Rear tires............$700...........they last 2000hrs.....................................$0.35/hr
Fuel. 2.5gal/hr.........~$2.50/gal............................................................$6.25/hr
Bushhog blades................$250.............replace every 200hrs..................$1.25/hr
Business insurance......Cost $600/yr.......put 200hrs / year on tractor..........$3.00/hr
Total tractor operating cost.................................................................~$12.50/hr

Factor in depreciation on tractor. Sure, the tractor will still have value after 5000hrs, but probably not without some major expense or rebuilds. So just assume tractor is going to be next to worthless at 5000hrs. Cost $20,000
So add $4/hr depreciation

Now add the truck and trailer cost....as its part of doing business as well.
Truck tires and trailer. Need them every 5 years. Which equates to 1000hrs of tractoring.
Truck tires...............$1000 ever 1000hrs approx on tractor.......................$1.00/hr
Trailer tires............Same $1000 ever 1000hrs.........................................$1.00/hr
Truck maintenance (oil, filters, brakes, etc).....$200/yr..............................$1.00/hr
Truck/trailer insurance.......................$1250/yr.......................................$6.25/hr
Truck fuel for hauling....500gal/yr........$1250/yr......................................$6.25/hr
Total truck and trailer expense..............................................................$15.50/hr

Truck and trailer depreciation, that at some point will need replace also. Probably $25k over 10years (and that may be low). So that factors about $12.50/hr as well.

Pushing $45/hr just to be able to be in business.

Sure, the truck and business expenses I correlate to hours based on the assumption of running the tractor for 200hrs a year for business. Obviously the more the tractor is used per year, the less the truck cost in terms of hours. But 200 is a good average for me over the last 3-4 years of commercial mowing.

And people wonder why my target is $75/hr.....or why I want $175 just to show up.

Guys running around with a broke down 1980's half ton, with an 8n and 5' hog, and no insurance, working for beer money.......no they dont have the overhead. You also never seem them on commercial accounts, or bank jobs to clean up abandoned properties, or realtor jobs for building lots, etc.

 

[LD1]

Exactly. When guys start figuring out how much depreciation and all that stuff I start chuckling. I don稚 know many customers that would pay what guys think they are worth for a 5-6 cutter. Customer doesn稚 care if you have 100k in equipment or 15k. The customer just want the job done. They are not responsible for your decisions to have top notch equipment. I price things fair, I知 definitely not the cheapest though. I bid it to where it痴 worth my time. I don稚 count on the income to live or pay bills. Everything I get goes in the safe so I can continue to pay cash for more equipment.



Brett

Sounds exactly like me.

You are right, no one cares if it takes you 12 hours with an old tractor and 5' cutter, or 6 hours with a modern tractor and 8' cutter, or 4 hours with a 150hp and 15' batwing. All they care is who is gonna be the cheapest.

But for piece of mind, one must still factor all their expenses related to their business.

If I was not in the mowing business, would I still own a 1-ton diesel and GN trailer.....probably not. Truck and trailer arent gonna last forever. Will need replaced at some point in time.

And for a 1-ton diesel and GN......I think $25k in 10 years is fair for depreciation. And same for tractor. I bought my MX for $20k. Sure, if I sell it after a year or two I could probably recoup all $20k. But then I'd still have to buy something else. (likely at a higher price). IF I keep it for 2000hrs....$4/hr depreciation I think is fair. THats $8k. Could I sell it for more than 12k if it had 2000hrs...probably. But I probably wont find a 350hr 3 year old 50hp machine for $20k.

 

[CobyRupert]

Good advice here.
Another pricing method that customers like, but manages contractor risk, is giving a "Not To Exceed" price. Especially when you can't predict what the "real" conditions are going to be (versus what the best case, or worse case conditions might be).

With a Not to Exceed, you can explain that you've quoted a "conservative" (worse case) price (based on X hours, or acres/hr, etc..) but if things go well and you save a few hours, you'll only charge them based on actual hours.



You may or may not want to state what this $/hr is; but (IMHO) it's no big secret. They're going to have a good idea of your $/hr at the end of any job anyways, no matter how you priced it. I think it makes for honest dialogue and open conversation if you let the customer know how long you think it might take (a best and a worse case).

With Not To Exceed:
The customer has a (max.) fixed price for the job (Benefits noted in above posts: Doesn't worry about if you're milking it, etc..)
Contractor is covered if worst case scenario develops
If best or medium case scenarios hold true customer walks away feeling like he got a deal and you still made your $/hr.
:2cents:

 

[LD1]

Good advice here.
Another pricing method that customers like, but manages contractor risk, is giving a "Not To Exceed" price. Especially when you can't predict what the "real" conditions are going to be (versus what the best case, or worse case conditions might be).

With a Not to Exceed, you can explain that you've quoted a "conservative" (worse case) price (based on X hours, or acres/hr, etc..) but if things go well and you save a few hours, you'll only charge them based on actual hours.



You may or may not want to state what this $/hr is; but (IMHO) it's no big secret. They're going to have a good idea of your $/hr at the end of any job anyways, no matter how you priced it. I think it makes for honest dialogue and open conversation if you let the customer know how long you think it might take (a best and a worse case).

With Not To Exceed:
The customer has a (max.) fixed price for the job (Benefits noted in above posts: Doesn't worry about if you're milking it, etc..)
Contractor is covered if worst case scenario develops
If best or medium case scenarios hold true customer walks away feeling like he got a deal and you still made your $/hr.
:2cents:

I still find customers flip out when they hear that someone charges $75/hr.

Even though I am charging $300, and was only on site for 3 hours.......they are okay with it because we agreed on $300. Never once had a person question it. But have had people question $75/hr.

And as someone with a larger and faster mowing machine than my average competition......my per hour price is likely alot higher than theirs as well. So thats another factor when deciding which way to price.

The guy with the 8n and 5' mower that advertizes $30/hr
OR me with my MX and 8' mower advertizing $75/hr.

Which one do you think the average customer gravitates towards because they think its gonna be cheaper.

Never mind the fact that he can only mow 1 acre per hour and I can mow 4 per hour.

So your 12 acre job.....he is gonna bill 12hrs.....12x30 is $360
For me....it would be 3 hours. 3 x $75 = $225

So guys with larger equipment than their average competition......you would be shooting yourself in the foot most of the time bidding per hr.

Guys with smaller stuff.....works well for them

 

[DieselBound]

Sounds exactly like me.

You are right, no one cares if it takes you 12 hours with an old tractor and 5' cutter, or 6 hours with a modern tractor and 8' cutter, or 4 hours with a 150hp and 15' batwing. All they care is who is gonna be the cheapest.

But for piece of mind, one must still factor all their expenses related to their business.

If I was not in the mowing business, would I still own a 1-ton diesel and GN trailer.....probably not. Truck and trailer arent gonna last forever. Will need replaced at some point in time.

And for a 1-ton diesel and GN......I think $25k in 10 years is fair for depreciation. And same for tractor. I bought my MX for $20k. Sure, if I sell it after a year or two I could probably recoup all $20k. But then I'd still have to buy something else. (likely at a higher price). IF I keep it for 2000hrs....$4/hr depreciation I think is fair. THats $8k. Could I sell it for more than 12k if it had 2000hrs...probably. But I probably wont find a 350hr 3 year old 50hp machine for $20k.

Good cattle folk price based on replacement cost. If you cannot get enough to replenish then you're going to be out of business. Of course, we cannot foresee what the markets in tractors and equipment are going to be in 10 years, but we have to anticipate it nonetheless, in which case depreciation is the only way "there."

A problem with everyone selling oneself/services too cheap is that eventually everyone prices out of the market. For smaller folk the competition is more likely with folks/potential customers renting equipment and doing it themselves. Some people can do this (I do for some equipment, and I feel that I'm close enough to professional operators that it makes my time worth it), but others cannot and, thus, will not- they'll look to hire you. (as demographics progresses further along the aging curve there will be more "cannots").

Being "fair" in pricing is fair to all. I can rent equipment cheaper from the guy I use, but I opt to spend more for better service: this keeps my guy in business, which is good for both of us. Being reliable will likely go farther than being cheaper.

 

[TheMan419]

As a former (and still occasional) consumer of such services I would not touch a bid by the hour with a 10 foot pole.

That said yes you still need to figure out a hourly rate to have in your mind. As detailed above figure out the cost per hour to operate and then add to that what you want to make.

I'd call around and see what competition charges to get an idea of if you can make a living at it.

Also for the mowing example you need to be prepared to tell the customer your price has changed when you get there. Assume they tell you it is flat wide open land last mowed 3 months ago. You get there it is land fenced off for pasture and clearly not mowed in YEARS. Well your price just went up big time. So you need to let client know before they hire you the price is $x ASSUMING the condition of the field is what they told you it was once you see it.

At that point when you tell them your price is more be prepared to lose the job on the spot.

 

[RichM752]

I'm $75 set up and $60 per hour. If customer wants a firm price for the job, I'll estimate on the high side, and they are usually happy to see final cost lower. Where I live there are 1, 2.5, and 5 acre parcels, hundreds of them. For local customers where I do not have to load tractor for travel, the $75 set up is good for 1 yr, and they pay 60 per hr with $20 minimum. When using the dump trailer for material, I charge $45 per hr + actual fuel costs. Most of my work is clearing overgrown brush, small trees, and manzanita. I only dig out stumps, and dig per test holes on undeveloped property. Any and all digging, including scraping and grading, I require owner to call for utility markings.
Snow removal, same price schedule $75/60 with $20 min, and thats contracted price, 10 customers only. Any other snow removal is double the price.
I've had only one unhappy customer. He wanted huge piles of pine needles removed and disposed of. Cried like a baby about the disposal costs at local dump. Wet pine needles @ $54 per ton adds up. It was hard to estimate dump fees, and I had a couple of 4 ton loads.

 

[Sprinklerman]

Looking at the hourly numbers everyone stated shows one thing to me ..........The suburbs of Balto , Annapolis and Washington DC are real expensive . I base my hourly rate for either my BX 24 or New Holland 1925 at $ 160 per hour with 1 implement . I flat price and land 75% of what I bid .

 

[LD1]

Looking at the hourly numbers everyone stated shows one thing to me ..........The suburbs of Balto , Annapolis and Washington DC are real expensive . I base my hourly rate for either my BX 24 or New Holland 1925 at $ 160 per hour with 1 implement . I flat price and land 75% of what I bid .

Yea, no way to swing that here. I can ocasionally push to $100/hr on some commercial accounts. Or sometimes it factors out at a high $/hr when applying my minimum charge.....but the average job, no way. And certainly not with a BX and a 4' mower. That setup around here.....and how productive it would be, you'd be looking at the $40/hr range.

My L3400 and 6' mower was a $60/hr machine