True Machinery Costs
Do you know your true costs of operating a machine? Its very easy to say my tractor with a man costs me £30/hr, but is that enough? The true cost of operating a machine needs to take into consideration the following:
- Repairs (around 10% of purchase price)
- Fuel (depends on the job so can’t be a flat rate for any job)
- Insurance (£6 per £1000 of purchase price)
- Depreciation (purchase price less part exchange price divided by number of years owned)
- Labour cost
Without knowing all these costs, you cannot determine the true cost of operating the machine and whether it is cost effective to use a contractor instead. In some cases it may be more efficient to hire a piece of machinery for the period you need it rather than owning something that will be unused for 75% of the year.
It is also important to know the costs of operating machinery when taking on new land, particularly if it is not local. Over the past few years, we have seen the cost of doing work rise 1.4 ppl, partly due to the cost of operating extra land, e.g. hauling silage back to the main farm, taking slurry/FYM to the land or checking livestock. Before you take on that extra land as the rent is “cheap” make sure you know your true costs.
To discuss this further contact Phil Cooper 07798 673665 or e-mail firstname.lastname@example.org
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