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Skid Steer Operating Costs

Discussion in 'Heavy Equipment' started by cold_and_tired, Oct 18, 2010.

  1. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    I did a search and didn't end up with anything useful.

    I have been going back and forth about actually purchasing a skid steer for the past few months. I just need some help figuring an actual operating cost.

    I have been renting equipment for the last four years. Operating costs are pretty easy to figure out when renting.

    I know my rough depreciation, insurance, operators wage and fuel but I am having a hard time figuring a good number to plug in for repairs.

    I would like to buy a machine with under 1,000 hours. What are the "typical" mechanical breakdowns I may encounter in the next 1,000 machine hours? I know it's a hard question to answer.

    I don't use machines very often during the summer so this skid steer would be parked most of the time.
  2. In2toys

    In2toys Senior Member
    Messages: 319

    Hydraulic hoses, but at under a 1000 hours you should be ok for awhile... I just got a hole in one the other day 2 inches from the end. Potestio wouldn't crimp on a new connector, cause it wasn't their hose. $90 later for a new 6' hose. I kept the old one to take to the parker store to have them shorten up. Tires are a big one for me, but I do alot of demo work. If you're just using it for snow work get a set of wolf paws for winter use & use the regulars in the summer. time for flat free's... other than that... smm fee's,
  3. DaySpring Services

    DaySpring Services PlowSite.com Addict
    Messages: 1,065

    I replaced a lift actuator on my machine in the spring. It was about $600.
  4. ford6.9

    ford6.9 Senior Member
    Messages: 452

    Did you do it your self?
  5. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    Is a lift actuator an off the wall repair or is it something pretty typical?
  6. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    construction equipment magazine says $30 to $35 per hour

    My experience says the same thing

    and yeah SMM fees on top of that.:mad:
  7. bighornjd

    bighornjd Senior Member
    Messages: 249

  8. JohnnyRoyale

    JohnnyRoyale 2000 Club Member
    Messages: 2,935

    And if the machine is tracked....tack on another $5.50-$6.00 an hour for replacement tracks. Just found that out a couple of weeks ago-replacement tracks, bogeys and labour cost me almost $6,500.00 after 1200 hours of use....and want to point out that we work in favourable conditions (mostly dirt) and use the machine 5 hours per storm in the winter plowing a couple parking lots..
  9. rich414

    rich414 Senior Member
    Messages: 294

    I have an s300 and 3 days before the warranty ran out the joy stick controls failed, it cost bobcat something like $3000...

    dont forget about the cost of snow chains
  10. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    Well, I guess I need a little more guidance here.

    What would you guys do?

    Lease two machines for $1,800 a month or buy one machine for $500 a month and rent the other on a per storm basis for $200 per storm? We average about two storms per month around here.

    I don't really need a skid during the summer months as my business model has changed somewhat. This past summer, I only rented a skid three times and each time was for no more than a week.

    With an operating cost of $35 per hour times 150 hours per season, that means I will be spending $5,250 per season plus $6,000 per year in machine payments. Add that to what I would spend by renting the other machine as needed and I end up spending roughly $13,650 per year on equipment. At an average of $90 per hour the machines make, they each need to combine for 152 hours per season just to break even. That number is easily attainable. I estimate that I will have a combined 250 hours between the two. Also, I at least have the option of finding summer work for the skid I buy.

    Since I am no accountant, I am only guessing that I can write off some portion of the price of owning the machine.

    If I went with a two machine lease, I will be spending $10,800 plus fuel.

    AHHHHH I'm getting lost in my own head here.

    Any help would be appreciated. Thanks
  11. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,976

    But you gotta remember you'll never be ahead anything if you rent... It will be like that forever... Alot of times i find u have to look 5 years down the road when you own it... all the numbers change alot!
  12. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    That's a big part of the issue as well. I headed to paramedic school this spring and honestly hope that I am not plowing snow in five years. I love the work, but the fire department has been my true calling since I was a little kid.

    I will be talking to my accountant tomorrow to find out what tax breaks there are for ownership. I pay her handsomely to do the hard math for me.
  13. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    if you buy the machine, you can depreciate the costs of owning it over some period of time (probably 3 to 5 years, ask your accountant)
    this should approximately equal your outgoing cash to pay off the loan.

    So, depreciation is a non-cash expense.
    You bought an asset (SS) with an asset (Cash). And paying off the loan just moves the asset (cash) to the asset (SS). This is why it shows profitable, but you run out of cash.
    But you depreciate that asset over time (it's not really, but just use it for this example, 20% per year for 5 years) which should approximately equal your outgoing cash to pay off the loan.

    that means you would take an expense to offset your taxable income by that amount, but you would still have the cash. Interest paid is of course an expense too, but also a cash expense.

    Of course, when you sell the SS, you have to pay taxes on the amount that you received back. (since the basis is now zero, you depreciated it all off), but this really isn't a big deal.

    If I had work to pay for it, I'd buy it outright

    It will more than pay for itself, and every extra hour goes straight to your bottom line.

    Rentals, you're paying for the maintenance up front (daily/weekly charge) which can be a plus and a minus, but rates can (and have a lot in the past year) go up. You get taxed to death on rentals (way higher rate than regular sales tax) and you get boned on the "insurance"

    All rental insurance in Colorado (and probably other states too) works this way and nobody realizes it.
    The 15% or so insurance you have to pay on the rental covers it if the tractor breaks while you are renting it. (the engine blows up for example)
    but if you flip the SS or drop it into a ditch, or break some little piece or whatever.
    insurance covers precisely NOTHING. So you're paying out the a$$ for something you don't even own. (plus usually lost income for the rental machine if it's down for a long time)
    it's NOT like rental car insurance.

    I'd buy it.
  14. DaySpring Services

    DaySpring Services PlowSite.com Addict
    Messages: 1,065

    From what I've read actuators are a common fail component. I did replace it myself. There were 3 allen screws that held it in. It was a little tricky to get at, but I managed to get it in. When I saw what it I couldn't believe that it cost $600 :eek:
  15. JohnnyRoyale

    JohnnyRoyale 2000 Club Member
    Messages: 2,935

    Operating costs dont change and equipment doesnt last forever either Chad. Machinery is a depreciating asset, and will eventually have to be replaced...that replacement cost should always be factored into your expenses even if you own outright own the equipment with no payments.

    Let me run this scenario by you...Lets say you have paid a machine off in 5 years and you arent factoring that monthly cost of ownership number into your expenses and you land a job solely based on your operating costs, plus a profit markup..what happens when that machine is a piece of junk in another 5 or 7 years and now has to be replaced? Now you have to buy or lease another machine to fullfil that contract as the so called profit you thought you were making was spent on something else and now that contract doesnt make any more sense for the price you originally got it for.

    Reality is that piece of equipment is probably only worth a downpayment on trade for a new one after 10 or 12 years.

    Something to think about. Someone correct me if I'm wrong please.:drinkup:
  16. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,976

    I agree 100% with you Johnny, but even still, the #'s on buying a skid and owning it for 10 years is totally different then renting...