06/09/2026
Just a friendly business PSA from someone who has been running equipment-based businesses for years and wants to see owner-operators succeed.
One of the most important lessons I learned is that before you can determine what to charge a customer, you must first know what it costs you to produce one productive hour of work.
A lot of contractors account for fuel and maybe the machine payment, but those are only part of the picture.
Every productive hour has to recover three categories of cost:
-Owning Costs�
-Operating Costs�
-Overhead Costs�
Only after those costs are recovered does profit begin.
For example, if a machine's ownership cost is $42/hr, operating cost is $28/hr, and overhead cost is $28/hr, the business has a true cost of about $98/hr before making a single dollar of profit.
If the owner wants a 50% markup on cost, the required billing rate becomes roughly $147/hr.
That's why the most important number in an equipment-based business is often Total Cost Per Productive Hour.
Once you know that number, then you can compare it against your local market and determine where you should be pricing your services.
Your cost determines your minimum sustainable rate. The market helps determine your final rate.
The goal isn't necessarily to be the cheapest. The goal is to find the price point that creates the greatest long-term profitability while still winning enough work to keep the business healthy.
That's the difference between guessing at pricing and managing pricing as a business owner.