Two halves of every machine
Ownership cost is what a machine costs whether it runs or not: the payment or the depreciation, interest, insurance, registration. Operating cost is what it costs once it is running: fuel, wear parts, maintenance and repairs. Most owners count fuel, sometimes blades, and nothing else. That is why the chipper never seems to pay for itself.
Operating per hour = fuel gal/hr × price + (price × maintenance %) ÷ hours per year + wear parts per hour.
Worked numbers for a typical rig
| Machine | Price / resale / life | Hrs per year | Ownership /hr | Operating /hr | Total /hr |
|---|---|---|---|---|---|
| Chip truck with dump body | $55,000 / $12,000 / 8 yr | 900 | $11.53 | $18.42 | $29.94 |
| 12-inch drum chipper | $42,000 / $8,000 / 8 yr | 700 | $9.36 | $15.02 | $24.38 |
| Bucket truck / lift | $85,000 / $20,000 / 10 yr | 600 | $21.83 | $21.15 | $42.98 |
| Stump grinder | $38,000 / $8,000 / 8 yr | 400 | $14.63 | $20.10 | $34.73 |
| Skid steer / mini loader | $52,000 / $15,000 / 10 yr | 450 | $14.67 | $14.58 | $29.24 |
| Saws, ropes, small gear | $9,000 / $0 / 3 yr | 1,200 | $2.50 | $4.26 | $6.76 |
Assumptions: diesel $4.10, insurance and interest as shown in the full calculator, maintenance 5% to 12% of price per year, wear parts $0.35 to $3.20 an hour (grinder teeth are the expensive one).
The hours-per-year trap
Ownership cost per hour is dominated by how many hours you actually use the machine. A bucket truck used 600 hours a year costs $22 an hour to own. The same truck used 300 hours costs $44. If you bought a machine for the two jobs a month that need it, it is far more expensive per hour than the one that goes out every day, and it should be priced onto the jobs that use it, not spread across every hour.
Build a "typical rig" rate
Add up only the machines that leave the yard on an average job. For most three-person tree crews that is the chip truck, the chipper and the small gear: about $61 an hour. The bucket truck, grinder and skid steer get added to the specific jobs that need them. That keeps your base hourly rate honest and your specialty jobs priced for the iron they use.
Signs your equipment rate is wrong
- You cannot afford to replace the chipper when it dies, because nothing was set aside per hour.
- Stump grinding feels unprofitable even when it is busy. Teeth are $5 to $12 an hour and rarely priced in.
- Your "equipment" line on quotes is fuel. Fuel is about a third of operating cost and a sixth of total cost.