Hours Drive O&O Costs

September 28, 2010

Hourly ownership costs vary widely with small changes in machine utilization, so a realistic estimate of hours of use is crucial to calculating machine rates. If utilization falls short of the estimate, your machine rate will be too low to recover all machine costs. For example, if a $135,000 dozer falls just 5 percent short of its projected lifetime hours—averaging 1,045 hours per year instead of 1,100—hourly costs rise more than $1. In contrast, you'd have to reduce repair costs 20 percent and add 140 productive hours in the machine's 7-year life to reduce its hourly costs by $1.

Utilization*
Hours per year Total hours O&O cost per hour
*$135,000 bulldozer
1,045 7,315 $36.29
1,100 7,700 $35.25
1,155 8,085 $34.31


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