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how much $ per piece of equipment

Discussion in 'Commercial Snow Removal' started by newlandscapes, Dec 2, 2015.

  1. newlandscapes

    newlandscapes Junior Member
    Messages: 24

    I see a lot of guys have snow only equipment, meaning large tractors with plows and/or blower and loaders etc. that seem to be only used in the winter. They might have some summer work, but they really don't get more than a hand full of hours in the off season. I'm wondering what type of income people figure a machine needs to bring in in order to justify the cost of the equipment.

    Since the amount of snow, the number of hours in a given machine per year, and the amount charged per hour vary greatly, there has to be a $ amount to justify these machines.

    For example if someone goes and buys a $60,000 tractor with a blower and plow set up on it. How much $ do you need to bring in per season to justify the cost of the purchase? I know if you plow hourly its hard to judge, but you have a good idea how many hours on average you might plow. Is $15,000 a season enough for a $60,000 setup?
     
  2. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,080

    Also interested to know...subscribed
     
  3. Herm Witte

    Herm Witte Senior Member
    Messages: 555

    Figure out a per sq ft price to plow snow and apply it to what ever equipment you use. Use your own production rates as a start to help you figure out the sq ft price.
     
  4. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,080

    No, I think he means how much a season do different people need to make with a piece of equipment to justify the cost when only using it for winter.
     
  5. Herm Witte

    Herm Witte Senior Member
    Messages: 555

    Fair enough. Figure out what you would want as a ROI for your money or any investment for that matter and apply the math. I'ts going to be different strokes for different folks.
     
  6. subydude

    subydude Junior Member
    from RI
    Messages: 19

    I'm also interested in knowing how people figure this out. One thing I know is it can't be fun making a payment on a snow only machine in july while it just sits around
     
  7. Herm Witte

    Herm Witte Senior Member
    Messages: 555

    The idea is to pay all the payments with winter revenue.
     
  8. jhall22guitar

    jhall22guitar PlowSite.com Addict
    Messages: 1,044

    This would be my guess.


    A longer answer though would go back to a class we had to take at school that we had to calculate the ownership costs for certain pieces of equipment to find out if ownership or leasing would be the best route.

    We had to calculate everything that would be "expected" to need to be replaced over a set number of years, some parts are apparently listed?.

    we then had to calculate the stuff that would then be replaced due to wear and tear by hourly use to see how much it had to make per hour in order to break even and make us money.

    I don't have the spreadsheets for those calculations here but it took almost everything into account to see how much it would cost us sitting there and how much we needed to make per hour in order to ensure that we were making money.
     
  9. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,080

    In short, that's what we're looking for. If you don't bring in say 50k in snow revenue, do you buy a piece of equipment for 50k? Say it takes 2 years to pay it off, but you have it for 10 years. Is it worth buying?

    From a very small company, I'm pretty curious (like the OP) how different people justify their equipment.
     
  10. rebert

    rebert Senior Member
    Messages: 103

    Curious over here too. I get the calculations and personal preferences, but guys who actually do it what's your expectations?
     
  11. snowplower1

    snowplower1 Senior Member
    Messages: 774

    Personally, for trucks, I try to make my routes make close to as much as they cost. So if the truck cost me 40k I want to bring in about 30k to 35k. If I were buying a loader I would have to have a reason for it in the summer and winter. It would also cost about 90k roughly to buy a loader maybe a little less so id want to be getting about 50k or 60k. That isn't too far fetched I feel as a loader should be able to knock off 2 big lots and I'm not a loader operator and we've never been interested in them but id imagine you should get 20k or so for a lot that'll take a few hours and split for the morning.
     
  12. navyman

    navyman Member
    Messages: 66

    I have never spent more than $14,000 on a loader... and bought some for far less.... you need a back up and you need to be mechanically handy. If you can't do these two things you are committed to spending $90K and will still have Maint. problems. All of my equipment is paid for the first year of use, and still have profits.
     
  13. snowplower1

    snowplower1 Senior Member
    Messages: 774

    Wow that is awesome. Ive never even seen a loader around here for less than 20 that didnt look like crap. If I could do that, id be buy 2 a year and getting into bigger lots!
     
  14. newlandscapes

    newlandscapes Junior Member
    Messages: 24


    Thanks JMHConstruction! I think you and i are on the same page.

    No offense but i don't care about $14,000 loaders. Thats not what i'm talking about. And frankly i wouldn't put a $14,000 loader on any of my sites.

    Also, plow trucks aren't really my concern here as a truck can be used year round.
    I really am interested in the 'snow only' equipment- in particular skids, tractors, etc.

    I know of a couple companies locally as well as a few larger guys on here that have 75-100hp tractors with plows and blowers and they are 3-4 years old and they are selling them with 300-600 hours on them.

    It really comes down to this. I want to add another tractor/blower set-up that would be around 40-50k range but really don't have much use for the tractor in the off season. What type of income do i need to justify it. If i bring in $15,000 over 4 years on a $40,000 tractors and it pays for it self and i own it afterward and could sell it for $25,000 is that worth it??

    I can calculate expenses all day, what i want to learn from is the guys with experience and the guys that have 5+ larger pieces of equipment.
     
  15. jonniesmooth

    jonniesmooth Senior Member
    Messages: 228

    snow only equipment

    This will sound like small potatoes to what the OP is talking about, heavy equipment, etc.

    I bought my JD 425 (a 1999) in 2012, $2500 cash, 700 hours on it. I was doing side jobs for a company maintaining foreclosed properties. In the 3rd property I got there was a hard cab for my 425, I got paid $100 to haul it home. (God is good, all the time), I got a used 47 blower for it, $1200 cash, and a blade, $500 cash.

    For 2 years we took the cab off and converted it from snow to mow. Then we added the heater and decided to keep it as a snow only use. So we sold the mower deck,and collection system.

    Then I bought my X720 to replace the 425 as a mower, $7000.00 cash. Used that for one year mowing, then found a hard cab for that $3,000 cash NOS (another blessing for God). Same story, you really don't want to take these cabs on and off, sold the deck and collection system. Bought a 60" broom used, $1500 cash. This year I picked up a Brand new (scratch and dent, damaged in shipping, on the original delivery pallet) 54" blower for $2,000, delivered. cash.

    The 425 has <800 hours, the X720 <600. They should have a life expectancy (IMHO) of 4,000 hours. If we put 200 hours/year on both. They should last 16 years.

    Because I have the tractors, I can add another $1,000/month in seasonal contracts. So each tractor earns $500/month, even if I only have to shovel that month.

    This is getting long, but that's how I did it.
     
    Last edited: Dec 3, 2015
  16. FredG

    FredG 2000 Club Member
    Messages: 2,239

    There are plenty of good usable loader in the 10 to 15k range. I have 3 wheel loaders and 1 skid all with pushers not sectionals this comes later. I never paid more than 13k for any of them and they don't work in the summer months and thats fine.

    The good thing is I was fortunate enough to pay cash for all of them and looking for another one. I have 5 HD pickups and since inquiring the loaders they hardly work. I do use a couple Finding curb lines and around corners, spreading etc.

    Find yourself a couple decent size facility's close to each other. Maybe $20k and up seasonal or $ 850.00 plus per push and your investment comes back your first snow season.

    When purchasing look for blowby, Center pin is not completely sloppy and leaks, All gears are there, Brakes they can be marginal but try to pay less.
    Some guys are still using straight frames. Lots of Cat 922 out there. Inline 6 only no V8 diesels.

    Most of the mid 80's early 90's are very simple to maintain and repair. $90k you would have to be a big road builder and plow in the winter. Sand blasting and metal work and paint and decal you will look like a 90k loader and the performance will not be different in the snow. Buy one use it one season and recondition it over the summer. There's a lot of guys bigger and a lot more capital then you or me still using these older loaders.

    Your performance is what counts not the machine you are using.
     
  17. FredG

    FredG 2000 Club Member
    Messages: 2,239

    OP, I am a little confused about your no offense response above,you will not put a $14k loader on any of your sites. What do you intend to do with the tractor blower?
     
  18. maxwellp

    maxwellp PlowSite.com Addict
    Messages: 1,112

    I would not spend more on snow equipment that it could pay for itself in one season. This is how I started out. Now I will not spend more on any snow equipment than I can pay for out of pocket.
    Last year was less than 1/2 our normal snowfall, no payments :). This year looks to be more of the same.
     
  19. ryde307

    ryde307 PlowSite Veteran
    Messages: 3,143

    You will have to calculate this on your own. I don't know if anyone can answer it for you. There is no specific calculation. In your example is it worth it? I am asking you. It may be to one but not to another. What your example forgets is the cost of operating said tractor. It needs a driver, fuel, maint. and god forbid it doesn't have any major breakdowns. When you add it up with your example I would say no.

    We own a few skids and a loader that are primarily used for snow. We base our decision to purchase off the amount of money it will make, if it will allow us to save money in other areas, any "extra" income for the summer, personal needs in the summer, Ect.

    I don't think there is a specific formula like it needs to make X% ROI for everyone. Everyone's needs are different. I would say if it only breaks even and all your "making" in the end is what the machine is sold for it is not worth it.
     
  20. navyman

    navyman Member
    Messages: 66


    I am not offended, I know how to make money with the least amount of investment. I have been in business for 30 years and this is how I do it. The last loader I bought I paid 14k for and I will probably use it for 3 years or so and sell it for 10k. All your questions are simple math, take our comments for what you think they are worth and go to work.

    Ford A-64 12' box
    Dresser- 510B 12'box
    Steiger- Panther 310 ST Tractor 18' box
    f-500- western/meier hybrid 10' straight
    f-150 boss straight 7'6"
    F-250 Meier Straight 8'6"
    New Holland boomer 40 bucket
    new Holland TC-29 bucket
    snow ex 2 yd salt spreader
    2- 1 yd 3 point pto salt spreaders.
    500 gal. Brine sprayer... just built this year.