Charging owned equipment to jobs at the right rate keeps job costs honest. Here is how to set rates.
In this article
Why internal rates matter
When you own an excavator or a skid steer, using it on a job feels free. It isn't. Payments, insurance, maintenance, fuel and depreciation are real costs. Internal rates charge them to the jobs that use the equipment.
Ownership costs
Purchase or loan payments, depreciation, insurance, registration and storage.
Keep reading — free
The rest of this article is worth the 20 seconds
Tell us where to send it and the full piece unlocks right here, along with everything else on this blog.
Rather just talk? Message us on WhatsApp.
Operating costs
Fuel, maintenance, repairs, tires and wear parts.
Utilization
Estimate realistic hours used per year. Low utilization means higher hourly cost.
The formula
Annual ownership plus operating costs divided by expected hours.
Job costing
Charge equipment hours to each job like labor.
Compare with rentals
If rental is cheaper, owning may not make sense.
Update yearly
Costs and usage change. Review rates annually.
Use in estimates
Use the same rates in bids so estimates match reality.
An example
A site contractor calculated its skid steer cost per hour and found that two jobs priced "without equipment cost" barely broke even. Bids now include equipment hours, and margins improved.
Where to start
Pick your three most used machines, gather last year's costs and hours, and calculate a rate for each.
Common mistakes
Ignoring depreciation, assuming full utilization and never updating rates.
Run tighter jobs and win the right ones.
We help construction companies build the systems, online presence and client relationships that bring better projects.
Frequently asked questions
Why should contractors charge owned equipment to jobs?
Because ownership and operating costs are real. Without internal rates, job costs look better than they are and equipment replacement isn't funded.