Contract Rate Calculator
What is this page?
This page enables users to calculate a contractor rate by factoring in depreciation and interest expenses for their tractors and implements, contract labour and profit margin – in addition to the Fuel, Oil, Repairs and Maintenance (FORM) costs transferred from the Machinery Setup page.
Calculating Contract Rates
A contractor rate for each tractor and implement combination is calculated with the following steps:
Calculation Parameters
1. Enter the average ‘Interest Rate’ paid on loans for new machinery (%), to factor in an opportunity cost.
For example, 7 percent.
2. Enter the ‘Contract Labour Rate’ in dollars per hour ($/hr).
For example $35/hr.
3. Enter a suitable ‘Profit Margin' as a percentage (%).
For example, 10%.
4. Click on the ‘Submit’ button.
Calculator Table
1. Click on the edit button for the tractor or implement to calculate a contract rate for.
2. Enter the price paid for the tractor or implement.
3. Enter an estimate of the salvage value of the tractor or implement, which is an estimate of how much the tractor or implement could be sold for at the end of its expected productive life.
For example, 15 years.
4. Click on the submit button and a contracting rate ($/ha) will be shown in the table in the farthest right column. This is the Total FORM, interest, labour and depreciation + profit figure.
The life of the tractor and the implement is very important for the depreciation calculation.
