Should I charge customers for my machinery and fuel?

When I first started my business in May 1984 I bought two Honda mowers and not having any business knowledge or experience I didn't charge any extra for use of machinery. I made my profit by literally working 80-100 weeks but I could have made a good deal extra by making a charge for the Honda mowers.

To get the job done we often have to invest in various tools and equipment.

We shouldn't, however, provide this equipment at our own expense and let clients benefit without compensating us for our costs.

Although many clients will want to keep their expenses down many will understand that there is a cost involved and be happy to pay you for providing the equipment to do their job.

As a business you need to at least break even on your capital expenditure and more favourably make a profit.

Lets us take charge-out rates for a lawn mower as an example: you can however apply the same principal to any machine you own and use whilst undertaking a project.

Let's assume the cost price to buy a mower is £1,000 (change the cost to suit your own situation).

If you are good with numbers and keeping records then you can really make this work by keeping an accurate log of how many hours you use your mower in any one season.

If you are too busy for the extra admin, you will have to take a view.

The mower has cost us £1,000 and it is hoped it will last us a minimum of three years.

Ideally we want to recover the cost of our £1,000 outlay in year one and then put away the charge-out revenue in year two to buy a new machine outright.

If we are disciplined about costs we could also purchase a second machine, as well as pay for the original one, in year one alone.

To claw back our outlay after just after 12 months is easy to calculate - we just divide by 12 to give us £84.00 per month or weekly it works out at £19.23 per week.

Of course we would not use your mower every month. As the season progresses our usage will increase from late March, where we might be doing a couple of hours a week, and from mid-May when we might be using it for 16 hours or more a week, for example.

Now we have to take calculate how much fuel the mower uses in an hour and how many times you replace the blade in a season (one replacement blade is usually enough for moderate use, with often just a sharpen-up). Any servicing costs will have to be included to charge back as an expense.

If your mower uses half a litre of fuel an hour then this has got to be charged back to the customer. This is easy. Fill your fuel tank to the top, use the machine for a set period and then re-fill with fuel. Measure the amount of fuel you put back into the tank and then calculate the cost based on what you are paying for gallon/litre

So if we used our mower for 100 hours in May, for example, we can recover £300.00 adding just £3.00 for the use of our machine. Remember, these charges are for your machinery alone, labour charges are seperate.

Comments

[Dave Smith-Williams]

Sound advice, we own several mowers that we hire out for a much lower rate than you state. We're now re-assessing the fee we charge based on your guidelines.

[Musik keren]

I charge customers for my machinery and fuel? Yes, We often meet people who rent the machine only, and they have to buy their own fuel

[Industrial Plant & Machine]

Yes, you msut charge your customers for your machinery and fuel.