farmcfo.com.au/tools/own-or-contract · 0412 759 847Own the machine or use a contractor?
Enter the machine's price, resale value, years kept, hours and work rate, and the running costs, then the contract rate. The calculator works out the fixed cost of ownership, the running cost per hour, the full cost per hectare, and the area a year at which owning costs the same as using a contractor.
Your figures stay in this browser. Nothing is sent to Farm CFO or anyone else.
- Owning costs a year (fixed)
- $15,073
- Running cost
- $87.00 an hour
- Cost to own and run
- $17.16/ha
- Contractor
- $45.00/ha
- On these figures
- Owning is cheaper
- Break-even area
- 442 ha a year
Depreciation $7,200, interest $6,073, insurance and shedding $1,800.
$137.24 an hour over 2,400 ha a year.
Difference $66,827 a year.
Below this, a contractor is cheaper. Timeliness still counts.
The method is based on NSW DPI's Guide to machinery costs and contract rates (Primefact 913, 2009), simplified to one insurance and shedding figure and without its allowance for timeliness. The figures are an invented example: a $120,000 machine kept 10 years and sold for 40%, 300 hours a year at 8 ha an hour, 20 L of fuel an hour at $1.60/L, $15/hour repairs, $40/hour operator, 1.5% insurance and shedding, and a $45/ha contract rate. The interest rate is RBA's August 2026 average small business rate on new loans (7.23%).
The working
- Fixed costs a year = depreciation (price - resale value) / years + interest on the average money tied up ((price + resale) / 2 x rate) + insurance and shedding.
- Running cost per hour = fuel + repairs and maintenance + operator.
- Cost per hectare = (fixed costs per hour + running cost per hour) / hectares per hour.
- Break-even area = fixed costs a year / (contract rate per hectare - running cost per hectare).
General information only. This calculator doesn't take account of your circumstances and isn't tax, credit or financial product advice. Check figures with your accountant before relying on them.
Want the numbers done for you?
Farm CFO builds the budget, the monthly cashflow and the tests your lender will run, at a fixed price.
Read next: Farm equipment finance
Questions
Is the cheapest option always the right one?
Not always. Owning lets you work on time, which can be worth more than the cost difference at sowing, haymaking or harvest. Contractors can be scarce when everyone needs them.
What fuel price should I use?
Your own cost per litre after GST credits and any fuel tax credits you claim. Your accountant can confirm the fuel tax credit rate that applies.