Your Yearly Cost of Tractor Ownership

[houska]

I bought my tractor in 2019 (3.5 years ago) and use it about 80 hours/year.

I have about $45-50k invested in it, including attachments: grapple, forestry winch, splitter, chipper, chains, brushhog, box blade, and backhoe. (I've converted all $ to US in this post, though I'm based in Canada).

Especially for occasional users like myself, I think you need to separate out expenses genuinely per usage hour plus additional expenses which actually accrue more per calendar year, irrespective of intensity of use (though you can divide that by your hours/yr at the end if you feel like it).

Per usage hour, there's fuel. I use about 1 5-gallon/20L can per 6 hours, which works out to $5/hr at today's prices.

In addition, there's major maintenance, which is caused by doing something dumb or unlucky. I've had 2 $1500+ repairs during my ownership, so call it $10/usage hr. Now this includes some improvements each time it's been in the shop, and as I get more experienced, I hope to be less dumb. So call it $7/hr as a longer term average.

Per year, there's regular maintenance. If I did it myself, would be $100-200/yr. If I put in hundreds of hours per year, it would be according to a usage-hours based calendar and added to the per-running hour cost, but for occasional use, it's more stuff you do every year or so. So far, I've had a lot of it done when having the tractor in the shop for major maintenance anyway, but I budget $150/yr going forward.

In addition, there's insurance, which I was lucky enough to get as a U$100/yr rider on my rural land policy.

That totals $250/yr, which divided by my 80 hrs/yr, is about $3/hr. This would change a lot based on number of hours actual use per year.

So total ongoing cash costs are about $15/hr, of which the bulk is how frequently and how badly I bash something up enough to need professional repairs.

That leaves the question of depreciation or "investment returns". I bought my tractor and 1/2 of my attachments new, 1/2 used. I expect the tractor will largely keep its value if I maintain it reasonably, especially if we continue in an inflationary world. I doubt I'll make a mint, but I doubt I'll lose a fortune too. If/when I sell it, it may well depend on economic fortunes then (do people have money? is equipment in short supply or plentiful?) and how much of a rush I'll be to sell.

On the other hand, I'll be happy if I resell attachments (if/when I sell) at 1/2 price. That's irrespective of specific age or hours used. I find attachments (fortunately) get beat up more than the tractor, generally get less maintenance and attention (they seem to get rusty or dinged when off the tractor, calmly just sitting there). And it will be less worth the hassle to try to sell them at top price if I ever need to.

If absolutely forced to guess, I'd say something like "in 10 years, I might sell everything at a 15+-% net loss, so $8k of depreciation over 10*80=800 hours". That would be another $10/hr cost. Plus it might be fair to say there's an opportunity cost for having capital tied up, though the way the economy looks, maybe I should look on it as "asset diversification".

Bottom line is I ballpark my cost at $25/usage hour, of which 20% is fuel, 25-30% is unexpected maintenance (variable), 40%+- is depeciation (and may be much less or much more) and 10-15% is other stuff. YMMV.

Here focusing on the cost angle. The benefit is what it lets me do, at all or much faster than without. And, frankly, while I'm not a prepper by any stretch, given all the bad things circling around in the world, the feeling of (greater) self-sufficiency has value as well! We may well get to the point where a tractor in the shed is worth much more than all the $$$ in the world in some imploding financial investment instrument.

 

[cfritz1]

Mostly curios about my fellow residential users- those of us who don't claim a tractor as a business expense. How much does a tractor cost you per year?

I only really *need* my tractor for one thing (snowblowing). Kind of curious to run the numbers to see if a tractor is the most financially efficient way to keep my driveway clear.

I run my tractor about 50 hours a year. Assuming a lifespan of 5000 hours for the tractor- well, it should pretty much last forever.

Initial purchase: $32k (L3901 with loader and SB1064 blower, taxes, etc.) In theory, there's a cost to keeping that much money tied up in something but financed at 0% for 84 months it might actually be making me money at current inflation rates.

Insurance: Required as part of the 0% financing. I get it through a local agent for $275/year.

Fuel: Maybe 25 gallons if that? $100

Maintenance. I think I paid about $200 for all the filters and oil needed for the 50 hour service. Will need roughly that again every 400 hours. Considering that's like an 8 year service interval, maybe we'll do those things more often and call it $200/year to cover things like grease and beer to consume while greasing the tractor.

So yearly operating costs are cheap: $575/year. About $10/hour.

But how to figure the long terms costs of the tractor? Assume I run it into the ground over 20 years and there's nothing left at the end: $1600/year.

For a grand total of $2175/year or $40/hour. I don't think I'm going to hire somebody at that price.

But tractors seem to hold their value very well right now. Even at 20 years old, a garage kept tractor with <1000 hours should fetch a nice price still. Who knows what tractor prices will be like in 2040, but If I can get $10k for it then, yearly costs would be down to $1675/year.

I'm curious how the operating costs for others work out- especially those that have bought and sold a couple tractors. It's pretty unlikely 2040 me is still going to want to be driving around backwards with no cab, blowing snow.

I purchased a 1998 John Deere 425 new and it has 1127 hours on it now divided by the cost of $8,087 equals $7.17 per hour to operate. I think that’s pretty good. Just replaced the original belt 7 engine hours ago. Lasted 24 years. Replaced the scalping rollers once.

 

[droy]

MANY years ago I jokingly told SWMBO that purchasing our first tractor would not only be used to maintain our 2.78 acres but also help to keep me from bar hopping, riding my Harley, chasing women, (in no particular order). Years & four tractor purchases later as I look back on many of my bad choices made enjoying those other “hobbies” I think owning a tractor has saved us considerable $$$$$
.

 

[SuperiorLakeEffect]

Eventually you pay it off, and the money you've put into it is not otherwise working for you as an investment. Let's just assume you pay cash up front. If instead you invested the money and earned 10% a year on stock investments (which is considered about average), you'd double your money every 7 years. That mean 21 years down the road your investment would have grown by 8x, or $256,000. So the decision you are making today is whether you want to plunk that $32k down on a tractor you own for 21 years (and then sell for whatever it is worth), or if you rather have $256,000 saved up for your retirement in 21 years (minus whatever you had to spend to rent or hire out tractor work)

Yeah, this is kind of what I was getting at, although I didn't really get into investment returns in my initial post. This was initially prompted by recent articles such as this, regarding the annual cost of car ownership. Although I'm able to significantly beat the average annual cost of car ownership in the US, it's still staggering what I've spent on cars and what it has cost me in terms of wealth. I could very literally have retired by 40 if I'd just learned to ride my damn bike 20 years ago instead of driving everywhere.

Wanted to make sure I wasn't making another idiotic decision like that and my opinion is generally.... no. I think 5% is probably a more reliable number for returns over 20 years and that makes my $32k tractor only an $85k tractor. Which, is a chunk of change, but something I've factored into the cost of living where I live and I'm generally OK with it. Other tractor owners with similar usage patterns are reporting similar low operating costs so those are fairly negligible (mine would total up to about 20k 20 years out which seems high, but that's beer money returns).

 

[Eagle1]

MANY years ago I jokingly told SWMBO that purchasing our first tractor would not only be used to maintain our 2.78 acres but also help to keep me from bar hopping, riding my Harley, chasing women, (in no particular order). Years & four tractor purchases later as I look back on many of my bad choices made enjoying those other “hobbies” I think owning a tractor has saved us considerable $$$$$
.

Ditto, sold my bike to buy my first tractor. Still have swmbo and that little tractor decades later.

 

[MongoCT]

I'm curious how the operating costs for others work out-

I'm sort of the same:
1) 900' long driveway so I have a front-end snowblower.
2) mowing with a mid- mount mower
3) miscellaneous FEL, BH, and pallet fork use

I figured a generic 2000 hours on the engine for costing things out using it 100 hours/ year. 20 years at 100 hours per? A good estimate for me.

Some of my use is low rpm, mowing and snow blowing is high rpm. I figure 2 gallons of diesel per hour on average. That's high in real use but it's what i figured.

Maintenance: grease, filters and fluids. Touch up primer on the snowblower after each season. Shear bolts for snowblower. Estimated at $300 a year and thats high.

Repairs, I've had no repairs.

Bought new @$22k.cash. LS MT125. No finance cost, no insurance carried.

I figured $11/hr for purchase ($22k ÷ 2000 hours) plus $8/hr for fuel (2gph) plus $3/hr for maintenance ($300 ÷ 100 hours per year).

Total $22 per hour. Over the past several years that cost estimate has been accurate or slightly high. Example, I replaced the fluids and filters last year so my only maintenance cost this year has been grease. Perhaps a dozen tubes of Red &Tacky, maybe $60.

The convenience of the tractor? The pleasure of knowing it's there when needed? To move dirt? Soil? Firewood? Stones? To offload pallets from delivery trucks? Very handy to have.

I have zero regrets buying it. It's a small tractor so digging can take longer, and transporting bulk materials with the FEL may require additional trips vs a larger tractor. But as a "lawn mower" it wont compact my soil and it's perfectly suited to snow blowing. Those will likely be my two primary long term uses.

The pallet forks turned it into a jack-of-all-trades-moving-things-machine. Small cost item with a very large return.

Again, zero regrets.

Edit to add:
If you wantto talk opportunity cost, in the first 18 months of ownership I easily exceeded its purchase price in site work.

So from then on out, with the exception of running costs, every time I use the tractor it's 'free'. And by not hiring future work out, I'm accruing that opportunity cost in the plus column.

All sorts of ways to look at it. Some accurate, some not so accurate.

I'd venture the easiest way to look at it is if youre buying a "trophy" tractor, a garage or barn queen? Financially you might have been better off making a different decision.

Edit to add...

 

[FERLING]

Mostly curios about my fellow residential users- those of us who don't claim a tractor as a business expense. How much does a tractor cost you per year?

I only really *need* my tractor for one thing (snowblowing). Kind of curious to run the numbers to see if a tractor is the most financially efficient way to keep my driveway clear.

I run my tractor about 50 hours a year. Assuming a lifespan of 5000 hours for the tractor- well, it should pretty much last forever.

Initial purchase: $32k (L3901 with loader and SB1064 blower, taxes, etc.) In theory, there's a cost to keeping that much money tied up in something but financed at 0% for 84 months it might actually be making me money at current inflation rates.

Insurance: Required as part of the 0% financing. I get it through a local agent for $275/year.

Fuel: Maybe 25 gallons if that? $100

Maintenance. I think I paid about $200 for all the filters and oil needed for the 50 hour service. Will need roughly that again every 400 hours. Considering that's like an 8 year service interval, maybe we'll do those things more often and call it $200/year to cover things like grease and beer to consume while greasing the tractor.

So yearly operating costs are cheap: $575/year. About $10/hour.

But how to figure the long terms costs of the tractor? Assume I run it into the ground over 20 years and there's nothing left at the end: $1600/year.

For a grand total of $2175/year or $40/hour. I don't think I'm going to hire somebody at that price.

But tractors seem to hold their value very well right now. Even at 20 years old, a garage kept tractor with <1000 hours should fetch a nice price still. Who knows what tractor prices will be like in 2040, but If I can get $10k for it then, yearly costs would be down to $1675/year.

I'm curious how the operating costs for others work out- especially those that have bought and sold a couple tractors. It's pretty unlikely 2040 me is still going to want to be driving around backwards with no cab, blowing snow.

How big is the smile on your face when using it and how much did your wife sale it for when settling your estate? When you have the answer to these two questions then I can answer if buying or not is the best! No matter what it cost, looking back you will have only one question, "Why didn't I buy it earlier in my life".

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[MAX-24-Dean]

How big is the smile on your face when using it and how much did your wife sale it for when settling your estate? When you have the answer to these two questions then I can answer if buying or not is the best! No matter what it cost, looking back you will have only one question, "Why didn't I buy it earlier in my life".

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My wife wanted to financially justify the tractor purchase. The justification was I could do manual labor for 8 hours a day 5 days a week most of the summer and be dead sooner or purchase the tractor and work 50 to 70 hours a year getting the same work done.
After one year with the tractor she said, "why didn't we buy the tractor sooner"!

 

[beenthere]

Mostly curios about my fellow residential users- those of us who don't claim a tractor as a business expense. How much does a tractor cost you per year?

I only really *need* my tractor for one thing (snowblowing). Kind of curious to run the numbers to see if a tractor is the most financially efficient way to keep my driveway clear.

I run my tractor about 50 hours a year. Assuming a lifespan of 5000 hours for the tractor- well, it should pretty much last forever.

Initial purchase: $32k (L3901 with loader and SB1064 blower, taxes, etc.) In theory, there's a cost to keeping that much money tied up in something but financed at 0% for 84 months it might actually be making me money at current inflation rates.

Insurance: Required as part of the 0% financing. I get it through a local agent for $275/year.

Fuel: Maybe 25 gallons if that? $100

Maintenance. I think I paid about $200 for all the filters and oil needed for the 50 hour service. Will need roughly that again every 400 hours. Considering that's like an 8 year service interval, maybe we'll do those things more often and call it $200/year to cover things like grease and beer to consume while greasing the tractor.

So yearly operating costs are cheap: $575/year. About $10/hour.

But how to figure the long terms costs of the tractor? Assume I run it into the ground over 20 years and there's nothing left at the end: $1600/year.

For a grand total of $2175/year or $40/hour. I don't think I'm going to hire somebody at that price.

But tractors seem to hold their value very well right now. Even at 20 years old, a garage kept tractor with <1000 hours should fetch a nice price still. Who knows what tractor prices will be like in 2040, but If I can get $10k for it then, yearly costs would be down to $1675/year.

I'm curious how the operating costs for others work out- especially those that have bought and sold a couple tractors. It's pretty unlikely 2040 me is still going to want to be driving around backwards with no cab, blowing snow.

Doesn't matter the cost. Having my tractor is "priceless".
Right now, I could sell it for more than I paid for it brand new.

 

[Sawyer Rob]

Your Yearly Cost of Tractor Ownership​

COST?? I've owned my rotary cutting tractor two years now, and it's "making" me money!

I've got back every penny I've put into it including fuel and oil, plus it's MORE than paid me back what I paid for it two years ago, it's all gravy these days!

SR