How to Determine What to Charge for Construction Equipment: A Comprehensive Guide
"How to Determine What to Charge for Construction Equipment" is an invaluable resource that offers clear and practical guidance on setting competitive rates for renting or leasing construction equipment. This guide caters to both novices and industry professionals, providing a step-by-step approach to help individuals make informed pricing decisions. Let's explore the positive aspects, benefits, and suitable conditions for utilizing this guide:
Comprehensive and Easy-to-Follow Instructions:
- The guide presents a well-structured and easily understandable framework for determining equipment charges.
- It breaks down complex pricing concepts into simple steps, making it accessible to all levels of expertise.
- The instructions are clear, concise, and accompanied by examples, ensuring a hassle-free learning experience.
Extensive Coverage of Pricing Factors:
- The guide covers a wide range of factors that influence construction equipment pricing, such as equipment type, age, condition, market demand, and location.
- It explores the pros and cons of various pricing models, including hourly, daily, weekly, and monthly rates, allowing users to choose the most suitable approach for their business.
Practical Examples and Case Studies:
Owning costs = purchase price of machine + financing + taxes – disposal price (what you get for that machine when you resell it). Operating costs = labor + fuel + maintenance + replacement costs of tires, tracks and other components + overhead.
How do you charge for equipment usage?
Additionally, contractors may consider charging an hourly rate for equipment usage. "RSMeans Estimating Handbook" by RSMeans Engineering recommends using an hourly rate that includes not only equipment costs, but also operator labor and fuel expenses.
How do you calculate equipment rate?
The Equipment Cost per Hour is a metric that takes into account all total ownership and operating costs for a given asset and divides it by all actual usage, in hours, of the machine.
How do you calculate total equipment cost?
If you multiply the variable costs—which are typically calculated by the hour—by annual hours of operation and add the expenditure to the annual fixed costs, you can calculate the total annual cost of owning the equipment.
How do you calculate equipment cost per hour?
To calculate the average total cost per hour, divide the annual total cost by the number of total hours that the machine is used. For some machinery investment decisions, machinery own- ership and operating cost are calculated for comparisons to the current custom rate.
Is depreciation included in break-even calculation?
Therefore, the higher the depreciation expenses, the higher the fixed cost, and the higher the break-even quantity. Depreciation should be included in the breakeven calculation even though it is not a cash expense.