Calculating mulching cost of operation

[deniscimafinc]

Question to professional mulchers:

What do you consider when calculating your operating costs?

I can think of:
- operating cost of the tractor/vehicle/carrier;
- fuel cost per hour given average fuel consumption;
- operator hourly cost (wages + taxes + whatever else you have to pay over the base salary);
- monthly insurance costs;
- hourly operating cost of the head;
- hauling cost (more per job, I can guess).

Is there anything else I should think of?


Thanks in advance in helping me get an more in-depth understanding of your business...

 

[yellowdogsvc]

Question to professional mulchers:

What do you consider when calculating your operating costs?

I can think of:
- operating cost of the tractor/vehicle/carrier;
- fuel cost per hour given average fuel consumption;
- operator hourly cost (wages + taxes + whatever else you have to pay over the base salary);
- monthly insurance costs;
- hourly operating cost of the head;
- hauling cost (more per job, I can guess).

Is there anything else I should think of?


Thanks in advance in helping me get an more in-depth understanding of your business...

I think you hit it. I just know my costs and get a good feel for whether or not the job will break something (which I would figure in). If it's a run of the mill job, I give out a daily rate. Sometimes I charge hauling, sometimes it's part of the "day".

What works for me is knowing my fixed and variable (fuel) costs each month. I then have a quota that helps me weed out unprofitable jobs or take some that I would ordinarily pass if the quota is in sight. It works out that I need about the same amount each month to stay in business. Beyond that (less any major repairs) could be viewed as profit but most of the time profit goes into repairs and new equipment wish lists.

 

[TMTS]

I think you covered things in broad stokes...I further separate cost for operation into things like teeth wear, replacing belts, track life, etc...has allowed me to compare my first gyro trac head to the Fecon...then looking forward to comparing the two 4810's I've had to what ever I replace them with...hopefully my costs will go in the right direction- down- if I upgrade to a PT, bobcat, Cat, Fecon, etc...

yellow mentioned terrain and how likely things are to break - but do other folks look at weather as a factor in costs? high heat and extreme cold I would suspect are factors - though I haven't crunched the numbers there...

-TMTS

 

[QwikDraw]

Under operating costs for the machine/head it would include:

Regular maintenance - oil changes, filters, grease, $10 per hour

breakage of parts/hoses/teeth - I just replaced the hi flow hoses on the DL 66 for $500 +, $10 per hour

track wear - about $400 per month for my rocky area, add that to my month tractor/head payment and a custom mulcher would not be much more. $6 per hour

Tooth wear of head - $2400 every 400+/- hours, $8 per hour

Hauling I figure $5 per mile

Not sure of insurance cost per day or hour

Let's all try and throw out some numbers to see if we are all thinking the same thing.


I would like to see the cost of running an tracked skid steer vs an excavator vs tired machine.

 

[yellowdogsvc]

yellow mentioned terrain and how likely things are to break - but do other folks look at weather as a factor in costs? high heat and extreme cold I would suspect are factors - though I haven't crunched the numbers there...

-TMTS

High heat here means more grease on the fittings. I try and grease my brush mower every 5 hours.Ditto with chipper.

I don't think the machines have too much extra maintenance with the heat though items like coolant are checked more often and oil is changed more in hot, dusty conditions. Wet weather is also a factor in the quota. If we are rained out for long periods like we were last summer, I look to plan and take different jobs to make ends meet. That's one of the major reasons I haven't switched to a dedicated mulcher setup. I have seen too many that just sit.

BTW, I wouldn't mind some extreme cold right about now. i might open an office in the southern hemisphere!

 

[Terra Firma Scott]

Ok-a cost I stumble upon.....should I or shouldnt I?

What about replacement cost of a new machine? 1-2 year "shelf-life" before your ready for a new carrier or cutter..? And if not years then hours in use?

You know what you paid for it -and to replace that with a new or bigger machine is gonna cost you..Or do you use 1-2 years profit (if any) to purchase?

It seems there could be a million different costs to this line of work but at what point do you stop adding to the list?--seems to drive your per hour or per day charge up and before you know it your out of the ball park...

Trying to stay inline with the market...a small outfit as myself..maybe we could suggest or compile a generic/basic list spreadsheet to base on....?

 

[yellowdogsvc]

Ok-a cost I stumble upon.....should I or shouldnt I?

What about replacement cost of a new machine? 1-2 year "shelf-life" before your ready for a new carrier or cutter..? And if not years then hours in use?

You know what you paid for it -and to replace that with a new or bigger machine is gonna cost you..Or do you use 1-2 years profit (if any) to purchase?

It seems there could be a million different costs to this line of work but at what point do you stop adding to the list?--seems to drive your per hour or per day charge up and before you know it your out of the ball park...

Trying to stay inline with the market...a small outfit as myself..maybe we could suggest or compile a generic/basic list spreadsheet to base on....?

I'm the wrong guy to answer because I like "newer" but I like to type and I'm full of opinions. Some would say I'm full of something else but that's another story!
If you find a good machine, there is no reason to expect that it wouldn't be ready to mulch every day after a couple of years of use. In fact, I trade out at just over a 1000 hrs when I am running two machines and they are in great condition. I guess that means about 1500-2000 hrs on one machine. Since the rotor isn't turning for every hour unless that's all you do, I think the machines have plenty of life left in them. Maintenance is a big issue. I keep my machines greased up pretty good and that helps keep the loader arms tight. Virtually no wear. In fact, I think a machine is just hitting it's stride in the 500-1000 hour range if it is properly maintained but I tend to trade up when better features come out. I just resigned myself to having a skid steer payment but I don't do that with other machines. I try and keep my trucks, chipper, and attachments until they won't function anymore. To me, if you like a cutter head, it's cheaper in the long run to replace components and rebuild than buy a new one. You can probably get a new rotor, belts, and maybe a hydro motor for around 5-6k. Does that sound about right? That's a heck of a lot cheaper than a 21-27k cutter head and if you had to finance the repairs, it's a much smaller note.

Paying cash is a good feeling. I'm looking forward to doing more of it in the future!

 

[Cat_Driver]

Can you put all the variables in a spread sheet, and get some hard numbers.

EXAMPLE : Take all equipment, and figure replacing it at lets say 3 years Truck 50k, tractor 60k, cutter 30k.

Now lets say you only work 1/3 of the year, for 3 years, or a total of 365 days. Take the 140k divide by 365, you get $383.00 a day to replace the equipment. But you want to make a profit on the equipment so double that to $767 a day. 10 hour day thats $76.00 an hour to replace and make a profit on JUST the equipment.

Now what is your time worth? To make 100k a year working 4 months comes out to 125 an hour. OK so now you're at about $200.00 an hour to equal 100k a year in wages, and profit on you're rig.

Now grease, oil, repairs, fuel what figure $25.00 per hour.

Grand total on this example $225.00/hr. plus or minus based on hours how much you want to make etc.

 

[Eagleview]

If you take into account fuel , oils , track/sprocket/roller wear , loader pins , teeth , belts , bearings , downtime , machine depreciation , interest paid on loans , advertising , yellow pages ads , buisness cards and letter heads , registration and insurance , breakdown repairs , work vehicle costs , transport cost's , hired help costs , damage you pay for out of your pocket because it's not worth claiming etc. you will find that you are not really making anything at all . All we are doing is filling in time untill we die . We would all be better off putting on a paper hat an working at Mc Donalds . The only thing we really get out of it is we are in the great outdoors and are not answerable to a boss and we make enough for our families to survive on . I do'nt know of anyone in the industry that would be able to say "i'll have that " and just write out a cheque for $10,000 without borrowing money .

 

[yellowdogsvc]

If you take into account fuel , oils , track/sprocket/roller wear , loader pins , teeth , belts , bearings , downtime , machine depreciation , interest paid on loans , advertising , yellow pages ads , buisness cards and letter heads , registration and insurance , breakdown repairs , work vehicle costs , transport cost's , hired help costs , damage you pay for out of your pocket because it's not worth claiming etc. you will find that you are not really making anything at all . All we are doing is filling in time untill we die . We would all be better off putting on a paper hat an working at Mc Donalds . The only thing we really get out of it is we are in the great outdoors and are not answerable to a boss and we make enough for our families to survive on . I do'nt know of anyone in the industry that would be able to say "i'll have that " and just write out a cheque for $10,000 without borrowing money .

add in taxes if you are an s corp or llc, costs of sales tax collection, computer and Internet, and tools.

It's an expensive venture.

It's a lofty goal to save up cash in this business but it's possible. You just have to know your costs and watch and track them monthly. Having a budget would help. I don't set a monthly budget because I have a quota and know my fixed costs month to month. For me, other than fuel and some repairs, it's mostly straightforward because I pay myself a steady salary so I know what I need to do to set my quota. Anything extra after expenses gets transferred to business savings. It has helped me purchase attachments and make large repairs with cash. Money management is as important as knowing how to operate a machine. It's not easy and not fun but it is necessary.

We use an excel spreadsheet to track everything. I don't like it and would prefer another way of doing it as I hate spreadsheets but it is what it is and works. My dad handles that for me everyweek and I get a report sent out on the weekend for review. Having a helper and an oversight buddy is a good idea. Just having someone to bounce ideas off (especially purchases) is also helpful at least in my case.