How to work out the cost per hour of a tractor or farm vehicle

To work out what a tractor costs per hour, add up everything it cost to run over a year (fuel, repairs, services, tyres and, if you want the full picture, depreciation and insurance) and divide by the hours it worked. For a bakkie or truck, divide by the kilometres driven instead.

The answer is only as good as your records. This guide shows the sums with a worked example, and what to do with the number once you have it.

What goes into the running cost of a tractor?

South Africa's Department of Agriculture publishes an annual Guide to Machinery Costs, and it splits costs the same way most farm economists do.

Variable costs are the ones that rise the more you use the machine. In the Department's worked tables these are repairs and maintenance, fuel and oil, and tyres.

Fixed costs are there whether the tractor runs or not. In the same tables they are depreciation, licence, insurance and interest on the money tied up in the machine.

Labour is a separate matter. The Department's examples leave it out, and you can do the same, or add the operator's wage per hour if you want to cost a whole job.

The Department's guide also notes that its cost per hour is based on clock hours, not tractor meter hours. If you use your hour meter, remember that the two can differ, and be consistent.

The formula

Cost per hour = (all costs for the year) ÷ (hours worked in the year)

Work it out in two parts so you can see what drives it:

Variable cost per hour = (fuel + repairs + services + tyres) ÷ hours worked
Fixed cost per hour    = (depreciation + insurance + licence + interest) ÷ hours worked

The same works for a bakkie or truck. Divide by kilometres instead of hours to get a cost per km.

Worked example: a tractor (hypothetical figures)

The figures below are made up to show the method. They are not typical costs. Replace every number with your own.

Say a tractor worked 500 hours this year, burning 12 litres an hour with diesel at R20 a litre.

Cost for the year	Calculation	Rand
Fuel	500 h × 12 L × R20	R120 000
Repairs	from your repair records	R30 000
Services (oil, filters, grease)	from your service records	R15 000
Tyres	share of the year's cost	R10 000
Variable total		R175 000
Depreciation	your own estimate	R40 000
Insurance and licence	from your policy	R10 000
Fixed total		R50 000

• Variable cost per hour: R175 000 ÷ 500 = R350 an hour
• Fixed cost per hour: R50 000 ÷ 500 = R100 an hour
• Total: R450 an hour

Now see what happens if the same tractor works only 250 hours and the fixed costs stay the same. The fixed share rises to R200 an hour. Idle machines are expensive, and that is a good reason to ask whether you need the tractor at all.

Which fuel price should you use? Use what you actually paid per litre. If you claim the SARS diesel refund, talk to your accountant about whether to cost fuel before or after the refund, then do it the same way every year. This is general information, not tax advice; confirm with SARS or your tax practitioner.

Cost per km for a bakkie or truck (hypothetical figures)

Same method, different divisor. Say a bakkie drove 20 000 km and used 10 litres per 100 km at R20 a litre.

Cost for the year	Rand
Fuel (2 000 L × R20)	R40 000
Tyres	R8 000
Services	R6 000
Repairs	R10 000
Variable total	R64 000
Fixed (depreciation, insurance, licence)	R30 000

• Variable: R64 000 ÷ 20 000 km = R3.20 per km
• Fixed: R30 000 ÷ 20 000 km = R1.50 per km
• Total: R4.70 per km

The Department of Agriculture's guide has separate tables for LDVs (bakkies) and trucks as well as tractors, if you want a published benchmark to compare with. Its introduction warns that costs vary by region and working conditions, so read the numbers as a guide and not as a standard.

Where do the numbers come from?

Each line needs a source in your own records:

• Fuel: the litres put into that machine, from your diesel logbook, and the hour-meter or odometer reading that tells you the hours or km.
• Repairs, services and tyres: invoices, plus the cost of your own mechanic's time and parts from the store.
• Hours or km: the meter readings at the start and the end of the year.

If any of these is missing, the number is a guess. Start with the machine that costs you the most and improve from there. A maintenance system that logs each job against the vehicle (see our guide on tractor service schedules) builds the repair and service side as you go.

How to use the cost per hour

Spot a machine that costs too much

Work out the figure for every tractor and bakkie, then compare machines doing similar work. The one with a much higher cost per hour is worth a closer look: is it fuel (a leak, theft or a worn engine), or repairs? Compare the same machine year on year too. A cost per hour that keeps rising is an early warning.

Decide whether to repair or replace

When a large repair comes up, compare three things: the cost of the repair, what the machine costs you per hour now, and what a replacement would cost per hour, with its own depreciation, interest and a warranty. The Department's guide notes that repair costs tend to rise with age, though not in proportion, so look at your own trend and not at a rule of thumb. Count the downtime too. A tractor that stands in the workshop during harvest has a cost that never appears on an invoice.

Cost a job or contract work

Cost per hectare = cost per hour × hours per hectare. This is the formula the Department's guide uses. If a tractor and plough cost R450 an hour in the example above and the job takes 1.5 hours a hectare, the machine cost is R675 a hectare, before labour and any profit margin. Add the implement's cost per hour as well. Without this number, a quote for contract work is a guess.

Choose between doing it yourself and hiring

Compare your own cost per hectare, including labour, with a contractor's price. Include the days you may lose waiting for a service or a repair.

Frequently asked questions

How do I calculate the cost per hour of a tractor?

Add up the year's fuel, repairs, services and tyres, add depreciation and insurance if you want the full cost, and divide by the engine or clock hours worked. Use your own records, not averages.

What is included in tractor running costs?

Fuel and oil, repairs and maintenance, and tyres are the variable costs. Depreciation, insurance, licence and interest are fixed costs. Labour is usually kept separate.

How do I work out the running cost per km of a bakkie or truck?

Divide the year's fuel, tyres, services and repairs (plus the fixed costs, if you want them) by the kilometres driven.

Is there an official guide to farm machinery costs in South Africa?

Yes. The Department of Agriculture publishes a Guide to Machinery Costs every year, with tables for tractors, implements, combines, LDVs and trucks. Grain SA also explains how to use it to cost operations.

When is it time to replace a tractor instead of repairing it?

There is no single rule. Compare the cost per hour now, the repair quote and the cost per hour of a replacement, and count the downtime. Records for several years make that comparison far more reliable.

Does AgriTrekker work out cost per hour?

The Maintenance and Repairs system records repairs and services against each vehicle, including your own mechanics' labour, and lets you compare vehicles over 30 days to 3 years with cost per km and per hour.