Equipment cost per acre is your total hourly cost for machine and operator divided by the acres that machine covers in one hour. Build that hourly cost from five parts: fuel and lubricants, repairs and maintenance, ownership, labour, and overheads. Leave one part out and the answer is too low.
Equipment Cost Per Acre Starts With One Number
Cost per acre equals hourly cost divided by acres per hour. Acres per hour equals width in feet times speed in miles per hour times efficiency divided by 8.25. The figure 8.25 equals 43560 divided by 5280. An incomplete hourly cost gives an incomplete cost per acre.
The Cost Per Acre Calculator asks for one hourly cost that covers machine plus operator together. The page help text says the hourly cost covers tractor, implement, fuel, repairs, labour and overheads per hour. Add the five components below into one hourly figure, then enter it. Use your own records, since the page gives no dollar figure for any component.
Fuel and Lubricants
Fuel and lubricants are the first component. Fuel is the diesel the tractor burns, and lubricants cover engine oil, hydraulic oil and grease. Work fuel from your own use: note the meter hours at each fill, divide fuel used by hours between fills, and multiply by the price you pay.
The calculator pairs your hourly cost with field efficiency, the part of working time covering fresh ground at full width. Small or irregular fields use 55 to 65 percent. Average fields use 70 to 75 percent. Large rectangular fields use 80 to 85 percent. Ideal fields with GPS guidance use 85 to 90 percent. The ideal band is 85 to 90 percent, never 88 to 90 percent. The page FAQ says to use 75 to 85 percent for most field work.
Repairs and Maintenance for Tractor and Implement
Repairs and maintenance are the second component, covering both tractor and implement. Most people understate it, because repair costs arrive in lumps. A season can pass with little more than filters and grease, and then a clutch or a hydraulic hose arrives in one bill. Averaging those lumps over the hours worked is the only honest way to turn them into an hourly cost.
Take your repair spending for tractor and implement over the last few seasons, and divide by the hours worked in that period. Include routine service, filters, wear parts, tyres and breakdown repairs. A tractor alone covers no acres, and an implement alone moves nowhere, so the repair cost of each belongs in the same hourly figure. Repair spending per hour usually rises as a machine ages, as the FarmCalcs equipment cost guide notes.
Ownership: Depreciation, Interest, Insurance and Housing
Ownership is the third component, and the one most often left out entirely. Ownership costs are depreciation, interest, insurance and housing. They are real costs even while the machine sits in the shed.
Depreciation is the loss in value of the machine over time. Spread that loss over the hours the machine will work in its life, using your own purchase price, expected resale value and expected hours of use. Do not count the full purchase price in one year and also count depreciation, because that counts the same money twice. Interest is the cost of the money tied up in the machine: interest paid to a lender, or the return that money could have earned elsewhere.
Insurance is the premium you pay to cover the machine, and housing is the cost of the shed space that keeps it under cover. Both are annual costs, so divide each by the hours the machine works in a year. Few annual hours means a high ownership cost per hour. Add the four items into one ownership cost per hour for tractor and implement together.
Labour: Operator Wage and Benefits
Labour is the fourth component: the operator wage and benefits. If you pay an operator, enter the wage plus benefits such as payroll taxes and insurance tied to employment. If you operate the machine yourself, enter the value of your own time.
Leaving labour out is the most common way to understate equipment cost per acre. A cost per acre with no labour in it prices the job as if your time were free. Your time is not free, and a comparison built on free labour will always favor doing the work yourself, even when hiring would cost less once labour is counted fairly.
Overheads: Trucks, Tools and Admin
Overheads are the fifth component: a share of trucks, tools and admin. These costs support the field work without being tied to one machine or one job. The truck that moves fuel and parts, the workshop tools, and the office time all make the field work possible.
Take the annual cost of each overhead item, decide what share belongs to this machine, and divide by the hours the machine works in a year. The share is a judgment, but it must be one you can explain and apply the same way every time. Overheads are easy to leave out, yet leaving them out still pulls the cost per acre down.
What Leaving a Component Out Does to Cost Per Acre
Leaving a component out understates cost per acre by a fixed proportion, because cost per acre equals hourly cost divided by acres per hour. Acres per hour does not change, so the cost per acre follows the hourly cost in direct proportion.
Suppose your own records show a missing component is worth a given amount per hour. Add it to the hourly cost and the cost per acre rises by that amount divided by acres per hour. The wider and faster the machine, the smaller the rise per acre. That error also corrupts comparisons: a missing component makes owning look cheaper than it is, and makes one machine look cheaper than another. The calculator cannot catch the error, because it divides the number you give it.
Worked Example: The 24 ft Field Cultivator at the Page Example Rate
The calculator page gives one worked example. A 24 ft field cultivator at 6 mph and 85 percent covers 14.84 acres per hour: 24 times 6 times 0.85 equals 122.4, and 122.4 divided by 8.25 equals 14.836364, shown as 14.84 acres per hour. If tractor, implement, fuel and operator together cost an example $150 per hour, the cost is 150 divided by 14.84, which equals $10.11 per acre as an example figure at the page example rate. A 160 acre field costs about $1,618 as an example figure at the page example rate, and takes about 10.8 hours, from 160 divided by 14.84.
The $150 rate is an example rate only, explicitly an example on the page, not a market rate. It stands in for the hourly cost you would build from your own five components, which will differ from $150. The example assumes the cultivator preset of 6 mph and 85 percent efficiency, and $0 travel and setup cost, the calculator default. Travel and setup cost is a separate input, added to the job cost, not part of the hourly cost.
What Happens to Cost Per Acre When Your Hourly Cost Changes
Cost per acre moves in direct proportion to the hourly cost. Double the hourly cost and the cost per acre doubles. Halve the hourly cost and the cost per acre halves. The table below works that out for the same cultivator at 14.84 acres per hour, at hourly costs the reader enters. Every figure is a reader entered rate worked from the page formula, not a market price.
| Hourly cost you enter | Cost per acre at 14.84 acres per hour |
|---|---|
| $75 per hour | $5.06 per acre |
| $100 per hour | $6.74 per acre |
| $150 per hour | $10.11 per acre |
| $200 per hour | $13.48 per acre |
Read the table from your own hourly cost, not from the example rate. If your five components add to $100 per hour, your cost per acre with this cultivator is $6.74. If they add to $200 per hour, your cost per acre is $13.48. The $6.74 per acre difference comes entirely from the hourly cost, because the machine, the speed and the efficiency are the same in both rows.
How to Build Your Own Hourly Cost
Build the hourly cost in the same order every time. Work through the five components, give each one its own line, and add the lines into one total.
| Component | What to enter | Where the figure comes from |
|---|---|---|
| Fuel and lubricants | Fuel and oil cost per hour | Your fuel log and service records |
| Repairs and maintenance | Repair cost per hour, tractor and implement | Your repair spending over past seasons divided by hours worked |
| Ownership | Depreciation, interest, insurance and housing per hour | Your purchase price, resale value, loan terms, premiums and shed cost divided by annual hours |
| Labour | Operator wage and benefits per hour | Your payroll records or the value of your own time |
| Overheads | Share of trucks, tools and admin per hour | Your annual overhead costs, shared by use, divided by annual hours |
Add the five lines and you have the hourly cost to enter in the Cost Per Acre Calculator. Check the total first: each line needs a figure from your own records, no cost on two lines, and no component missing. Rebuild the hourly cost when the facts change.
What to Leave Out of the Hourly Cost
Three things do not belong in the hourly cost. First, travel and setup cost. It is a separate input on the calculator, with a default of $0, added to the job cost after the hourly work is priced. Putting travel into the hourly cost would hide it.
Second, the full purchase price does not belong in the hourly cost. It belongs in ownership only as depreciation, spread over the machine life. Counting the whole price in one year and also counting depreciation would count the same money twice. Third, a contractor rate does not belong in the hourly cost. It is a price for a finished service, so use it as a comparison after you have built your own cost per acre, not as an ingredient inside it. The guide on contractor pricing with productivity rates explains how a contractor builds a price from productivity.
Frequently Asked Questions
Q: What is equipment cost per acre?
A: Equipment cost per acre is your total hourly cost for machine and operator divided by the acres that machine covers in one hour.
Q: What five costs make up the hourly cost?
A: Fuel and lubricants, repairs and maintenance for tractor and implement, ownership as depreciation, interest, insurance and housing, labour as wage and benefits, and overheads as a share of trucks, tools and admin.
Q: Why does leaving one cost out matter so much?
A: Cost per acre equals hourly cost divided by acres per hour, so a missing component lowers the hourly cost and the cost per acre follows it in direct proportion.
Q: What is the worked example on the cost per acre calculator?
A: A 24 ft field cultivator at 6 mph and 85 percent covers 14.84 acres per hour. At an example $150 per hour, the cost is $10.11 per acre as an example figure at the page example rate, and a 160 acre field costs about $1,618.
Q: How do I turn annual ownership costs into an hourly cost?
A: Add depreciation, interest, insurance and housing for the year, then divide by the hours the machine works in a year. Fewer hours means a higher ownership cost per hour.
Q: Should travel cost go in the hourly cost?
A: No. Travel and setup cost is a separate input on the calculator, with a default of $0, and it is added to the job cost.
Build the Hourly Cost First, Then Calculate
Equipment cost per acre is only as honest as the hourly cost behind it. Build that hourly cost from the five components, using your own records for every line. Enter the total in the Cost Per Acre Calculator and the cost per acre that comes back will be your own figure, not an example and not a guess.
