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 $35/hr.
3. Enter a suitable ‘Profit Margin' as a percentage (%). For example, 10%.
4. Click on the "Submit" button.
Calculator Table
1. Click on the edit button for the tractor or implement to calculate a contract rate for.
2. Enter the price paid for the tractor or implement.
3. Enter an estimate of the salvage value of the tractor or implement. For example, 15 years.
- This is an estimate of how much the tractor or implement could be sold for at the end of its expected productive life.
4. Click on the "Submit" button and a contracting rate ($/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.
