Use this when you are about to buy a machine, or already own one and suspect it earns less than it costs. You will sort the cost factors that decide your cost per hour into three groups and fill one formula from your own invoices and logs. Then you can see what a quiet month does to the hourly figure.
Why is the purchase price only part of the cost?
The purchase price is paid once. The machine then costs money every month it exists and every hour it runs. A buyer who compares only price tags may pick the machine that is cheap to buy and expensive to keep working.
Two machines of the same type can also differ in fuel use, wear-part life, ease of repair and how quickly parts arrive. None of this shows on the price quotation.
A cost model fixes this. Write down every cost and ask one question: what does one working hour really cost me?
Which costs do you pay whether the machine works or not?
These are the ownership costs. They continue while the machine stands still:
- Capital tied up, or finance cost. Money spent on the machine cannot be used elsewhere. If you borrow, the finance cost runs every month.
- Insurance. Ask your insurer what cover your machine and your sites require.
- Registration or inspection fees, where they apply. Which ones apply depends on the machine type and the site owner. Confirm with the supplier, your insurer and the client.
- Parking or yard space. A machine between jobs still needs somewhere secure to stand.
- Loss in value over time. Machines are usually worth less each year. This is a real cost even though no invoice arrives.
For finance questions, see buying equipment: cash, finance or rent.
Which costs grow with every hour it works?
These are the operating costs. If the machine does not run, most of them stay close to zero:
- Fuel. Use depends on load and idle time, not only engine size. A machine idling or lightly loaded burns fuel without producing work.
- Engine and hydraulic oils, and filters. They are usually changed by hours worked, or by calendar time if the manufacturer sets a limit, whichever comes first. More hours means more changes.
- Wear parts. Examples are tracks or tyres, cutting edges, teeth and brake parts. They wear with work and are replaced when worn.
- Repairs. A machine with high total hours usually needs more repairs than one with low hours.
- The operator. If the operator is paid by the hour or day worked, the wage grows with hours. If the operator is on a fixed monthly salary, count the wage with the fixed (ownership) group, because it continues when the machine is parked.
Write down litres added and hours worked at each fill-up. To see operating costs per hour, divide each by the hours it covers:
- Fuel per hour = litres used ÷ hours worked, times the price you paid per litre.
- Wear part per hour = what the part cost ÷ hours it lasted.
- Service per hour = the service invoice ÷ hours between services.
Add these per-hour figures and you have B ÷ H, the operating share of each working hour.
What hidden costs do owners forget?
Hidden costs do not appear in a machine's price or in a service invoice. They are still real:
- Transport to and from site. A machine that moves often pays for a trailer or low-loader again and again.
- Downtime. Waiting for parts or repair earns nothing and already lowers H. Add to C only the cash you spend because of it, such as hiring a substitute machine or paying for urgent parts freight.
- Management time. Someone books, checks, schedules and supervises the machine. That time has a cost.
Before you buy, ask the supplier how long parts usually take to arrive for this model in your city. That wait lowers H.
How do I turn these into a cost per working hour?
Pick a period, such as one year. Add all three groups of cost for that period, then divide by the hours the machine actually worked.
| Step | What you write down |
|---|---|
| 1 | Yearly ownership cost, call it A |
| 2 | Yearly operating cost, call it B |
| 3 | Yearly hidden cost (transport, cash spent because of downtime, management time), call it C |
| 4 | Hours actually worked in the year, call it H |
| 5 | Cost per working hour = (A + B + C) ÷ H |
Where the numbers come from. Take A from your finance statement, insurance invoice and yard costs, plus any fixed operator salary.
Loss in value has no invoice. Estimate it as the purchase price minus the price you expect to sell the machine for, divided by the years you will keep it. Ask a dealer or a supplier of used machines what similar machines of that age sell for, and treat the answer as an estimate. If you paid cash, you can still count the interest the money could have earned as capital cost, or leave it out and say so.
Take B from the per-hour figures above or from fuel logs, service invoices and parts receipts. Take H from the machine's hour meter, read at the start and end of the period.
Use hours worked, not hours available. A machine on site all day may only work for part of it.
For example, say the machine works H hours in year one and H ÷ 2 hours in year two. Ownership cost A is the same in both years. Operating cost B falls to B ÷ 2, because it follows the hours. To keep it simple, leave C out.
| Hours worked | Ownership cost | Operating cost | Cost per working hour | |
|---|---|---|---|---|
| Year one | H | A | B | A ÷ H + B ÷ H |
| Year two | H ÷ 2 | A | B ÷ 2 | 2A ÷ H + B ÷ H |
The ownership share of each hour doubles, while the operating share stays roughly the same. Ownership costs do not shrink when work does.
Two mistakes to avoid:
- Mixing periods. Keep A, B, C and H for the same period, for example the same twelve months.
- Counting idle time twice. Idle days already lower H. Do not add a cost line for them as well.
Note. To compare rent and buy, run this formula for the machine you own, then compare it with a rental quote. See rent or buy heavy equipment for the decision itself.
How do ground, heat and dust change the cost?
Your sites change the numbers in your formula, so use your own records.
Ground. Wear on tracks, tyres, buckets and cutting edges depends strongly on the ground. Rock and abrasive sand wear parts faster than soft soil. A machine on rock may need wear parts replaced more often, which raises B.
Heat, dust and sand. These increase cooling, air-filter and cleaning work. Maintenance intervals in these conditions are often shorter than in mild climates. Follow the manufacturer's guidance for severe conditions, and ask the supplier which intervals they recommend for your site. For protective habits, read dust, sand and overheating: protecting your machines.
| Condition | What to record |
|---|---|
| Rock or abrasive sand | Hours between wear-part changes |
| Summer heat | Overheating stops and cleaning time |
| Dust and sand | Filter changes per period |
Keep a simple log for each machine. The hours between changes give you the wear and service figures above, so after one year you have your own numbers to replace every general estimate.
How to do this on Maedah
To compare with a supplier's daily, weekly or monthly rate, multiply your cost per working hour by the hours you expect the machine to work in that period, and check what the quote includes. Browse excavation equipment, lifting equipment or power equipment to see photos, specs and certificates.
Then post a request with the machine, city, site on the map and dates. Suppliers reply with sealed quotes, shown side by side. To see what a quote covers, read what an equipment rental rate includes and leaves out. Agree price and payment directly with the supplier.
