What tips should I keep in mind?

Custom hiring is cheaper than owning for equipment used less than 200 hours/year. Total cost per acre decreases as you farm more acres — this is the main driver of farm scale. Lease vs. buy analysis should compare after-tax cash flows, not sticker prices.

Equipment Cost Calculator

Calculate the true cost per acre or per hour of owning and operating farm equipment including depreciation, repairs, fuel, and interest.

Results

Visualization

How It Works

True equipment cost includes depreciation, interest, insurance (ownership costs) plus repairs, fuel, and labor (operating costs). Depreciation is the largest single cost. Spreading costs over more acres lowers cost per acre — this drives farm consolidation.

The Formula

Depreciation = (Purchase - Salvage) / Life
Cost/Acre = (Ownership + Operating) / Acres/Year

Variables

Depreciation — Annual decline in value (straight-line method for cost analysis)
Repairs — Annual repair cost estimated at 3% of purchase price (increases with age)
Salvage Value — Residual value at end of useful life (typically 20-35% for major equipment)

Example

$350,000 tractor, 15-year life, 30% salvage: depreciation = $16,333/yr. Total annual cost ~$45,000. Over 1,500 acres = $30/acre.

Tips

Custom hiring is cheaper than owning for equipment used less than 200 hours/year.
Total cost per acre decreases as you farm more acres — this is the main driver of farm scale.
Lease vs. buy analysis should compare after-tax cash flows, not sticker prices.
Keep detailed hour meters — cost per hour is the best metric for replacement timing.