Learning CenterStage 2 · ControlGuide 7 of 22
Pricing 101
Equipment Cost per Hour
Price every machine hour, and buy or rent smart.
A machine costs you money every year you own it, not just when it runs. Add up what it costs to own and to run, divide by the hours you actually use it, and you have the hourly cost to price into every job.
What does an hour on a $60,000 skid steer really cost?
Example machine1 · Cost to OWN it (per year)
- Purchase price$60,000
- − Resale value after 5 years$20,000
- = Value used up ÷ 5 years$8,000
- + Interest on the loan$2,400
- + Insurance, registration, storage$1,200
- = Ownership cost per year$11,600
- ÷ 600 hours used a year$19.33 /hr
2 · Cost to RUN it (per hour)
- Ownership (from box 1)$19.33
- + Fuel: 1.5 gal × $4.00$6.00
- + Maintenance & repairs$5.00
- = True cost per hour$30.33
Billing rate at a 25% margin
$30.33 ÷ (1 − 0.25) =
$40.44 /hrThe more you use it, the cheaper each hour gets
True cost per hour, same machineOwnership costs are paid whether the machine runs or sits. Idle equipment is expensive equipment.
Buy or rent?
Say a rental runs $300 a day, about $43.50/hr with fuel.
Only 300 hours of work a year? Owning costs $49.67/hr: rent.
600 hours a year? Owning costs $30.33/hr: buy.
Track the hours
Log machine hours by job. They drive your rate, your job costing and your buy-or-rent decisions.
Try it with your own machine
Starts with the example skid steerWhat does an hour on your machine cost?
Fill in boxes 1 and 2 for one machine to get its true cost per hour and a billing rate.
Want every guide in one printable file?