Running costs of a chipper

[Redbull]

Rolla, I see your point, but you have to add the cost of the chipper into the equation, how else are you going to be able to afford to replace it? The way I look at it is this. I break down what it would cost to replace the chipper in X number of years (your preference), and the cost of fuel and maintainance. Everytime I bill this amount per hour for the chipper, this money is set aside. When the time comes for maintainance or replacement, you will have a nest egg to dip into for the cause. Does this make sense or am I missing something?

 

[begleytree]

I don't bill to replace it, I bill to pay for it. At the end of 5 years, I've gotten paid enough that it's been paid off (plus some), and still holds residual value for trade in, or as a spare. The next one is on payments, and the billing price changes accordingly. Theres no way I can predict what a new chipper will cost in 5 years. I know what the billing price will be close to for an X amount of money (price) and know what the local market will bear, combined with how well the new chipper fits with my needs, I can set myself a limit on how much money to spend on the next chipper.
If you pay cash for one, you start by paying yourself back, as you loaned your company the money for the chipper, then start building profit towards the next one to go along with the usually lower trade in value. Most guys don't pay cash for a $25K chipper, usually under $10. Thats reflected in the trade in value, and will need added to by residual profit.
my take-Ralph

 

[Koa Man]

A chipper saves me money big time. Right now my chipper truck is under repair and disposal fees are costing me about $100 a day. With a chipper, no disposal fee and usually no more than $20 worth of fuel. Taking into account the extra costs of maintenance and other factors, I figure a chipper probably saves me $60 a day. That's an extra $1200-1400 extra in my pocket per month.

Be prepared for new chipper prices (and new truck) prices to be a lot higher in 2007. The various equipment manufacturer's told me at TCI that due to stricter emission controls required in 2007, the engine manufacturers have informed them to be prepared for a 25% increase in prices.

 

[ROLLACOSTA]

Does this make sense or am I missing something?

We both are correct ,what i'm saying is if a guy with a chipper bids against a guy without a chipper the guy with the chipper should in theory be cheaper,because the guy without a a chipper will have to spend more $$ on man hours ,dumping costs,hauling costs ie fuel wear and tear etc etc .Like all businesses obviously you have to add up all your costs ie wages,equipmant costs,insurance,etc etc to get get your day or hourly rate nothing comes for free..

Slightly off topic but I believe a firm carrying out big TDs and has a **** load of big equipment bucket trucks,18''chippers ,big trucks,etc etc,,can price there jobs up cheaper than a firm with regular kit climber mid size truck climber and average size chipper anyone agree or disagree??? p.s i have never really done the math on this so its purely guessing

 

[Koa Man]

In one trade magazine a few years back, it highlighted a company that did all of its work with a roll off truck and loaders. It would drop the bin at the site and the crew would load the bin with the grapple loader, like a Swinger. No chipping on site. It would take all the debris to its yard and run it through a tub grinder. They found that it was the fastest and most efficient way for them. One truck could just drop bins at several sites. I thought it would be great if you had the space and finances to set up such an operation.

 

[SteveBullman]

ive always thought that prices should work out roughly the same for the guy with all the kit and the guy with the bare essentials. difference being the guy with the kit gets the job done in a fraction of the time and is on to the next job whilst the small time guy grafts all day, probably earns just as much as the big fella.
course this is all down to the individuals pricing

 

[ROLLACOSTA]

ive always thought that prices should work out roughly the same for the guy with all the kit and the guy with the bare essentials. difference being the guy with the kit gets the job done in a fraction of the time and is on to the next job whilst the small time guy grafts all day, probably earns just as much as the big fella.
course this is all down to the individuals pricing

Your probably coorect,what i should of said who out of big guy 'n' little guy is the more proffitable at the end of the year..

 

[dshackle3]

I never thought about that. Sounds like it would be very fast and cost efective.

 

[DDM]

I'm running a Bandit 200+ with a 300 6cyl
and a BC1400XL with a Cat diesel.

The Diesel will burn 1.5 gallons per hr. The Gas is burning about 3 an hr.
I also have a Chuck-N-Duck But it's been so long since it has been used i cant remember
how much fuel it burns.

 

[DDM]

I wouldnt even attempt to do tree work without a chipper.

 

[Redbull]

Rolla Posted:

Slightly off topic but I believe a firm carrying out big TDs and has a **** load of big equipment bucket trucks,18''chippers ,big trucks,etc etc,,can price there jobs up cheaper than a firm with regular kit climber mid size truck climber and average size chipper anyone agree or disagree??? p.s i have never really done the math on this so its purely guessing
__________________
I agree they should probably be able to gross more, but their net profit might by lower because of their overhead.

Here is my theory and the numbers I crunched last night. Let's say I want purchase a new chipper in three years. I set a replacement value at $30k. Over 3yrs that would be 10k a year. Now, for numbers sake let's say that this chipper could be billed for 1hr/day, 5 days a week which means 260 hrs billed a year. Remember, this is for numbers sake and everyones usage will vary. For newer companies this could be a tough number to determine because you don't have experience on your side. Okay, so you need 10k a year divided by the 260 billable hrs/yr to come up with 38.46/hr. That is just for the machine and does not include maitainance or fuel, but you get the picture. Now, if I can bill this chipper out for this many hours a year, for three years, you now have 30k to invest in a new chipper, cash,no financing needed. If I missed some things, please point them out cause I'm here to learn.

 

[Redbull]

The key to this method is to not spend this money. Yes , I know you will have to pay taxes on the money you save through the years, but this can be figured in and a good accountant can help minimize what Uncle Sam gets.

 

[PTS]

I might be the only one on here that does this but i don't bill out separate pieces of equipment on a job. They are my tools of the trade. I replace them when I need to. I operate my business on a how much money are we making a 1/4, 1/2, 3/4, and year. I am going to just use an easy round number of $100 dollars an hour. Lets say I go to the job and look at it and with the equipment I have it is going to take 6 hours so the price is $600. This includes groundsman and equipment. Now lets say gas goes up and I am underbidding my competitors then maybe I raise it to $110 and hour. The best part of this method is at the end of the day you can check yourself on how you did on your bid. If you bid 6 and took 10 then stupid you. If you bid 6 and took 3 then take the wife out for supper

It works for us. I do have an hourly rate on the chipper (we operate), skid loader and trailer rental and the bucket truck odd job usage (again we operate.)

 

[DDM]

If you bid 6 and took 10 then stupid you.

I call it Stupid Tax I Seem to pay allot of it.

 

[PTS]

My bidding has always been similar to PTS's except I start with how much I need to make per day, and then figure how much of a day or days it's going to take to do the job including travel time.

If the job is extremely equipment heavy I up the bid a bit to cover my increased cost. If the job is real equipment light......I reduce my rate slightly if I think I need to to get the job. I also give large bids on day rates alone with no fixed final price and tell the customer we will stop when they want us to. Day rates often mean no final rake up......unless of course they want to pay us to rake.

By setting prices by the day or percentage of my day rate when I get backed up a bit I start aiming for a higher day rate.

Tree Co,

I adjust mine that way to and really like the end results. Much easier to bid and it helps me out because a couple of my head guys have the ability to bid jobs based on this concept because the only thing they need to know is how long it will take and multiply by the day rate. Which takes a lot of weight of my shoulders when they are on a far out of town job and the neighbor comes over and wants a bid on something, they just go ahead and bid it.

 

[xander9727]

I don't know, I do know Morbark can, I figured it may be worth a try. BTW, mine has a stamped tag about 18" long on the tongue with the serial/VIN # stamped into it. Not saying you're blind, but a good handrub over parts may find it.

KOA, If I were in your area, I'd agree with you. But in cold weather, diesel adds another problem I don't have with a gasser. In cold weather, I pull the choke, crank for about 3 seconds, and she fires right up. Diesel has it's advantages, but due to weather and diesel availability here, It's more hassel than advantage.
-Ralph

Don't believe him Redbull that's exactly how he told me I was blind...

Begley,
The newer diesels are a lot better than a few years ago. I have a Cummins on my chipper and it fires up in 15 degree weather without a block heater. It runs a little rough for the first minute but I've yet to have it fail to start.

 

[xander9727]

I might be the only one on here that does this but i don't bill out separate pieces of equipment on a job. They are my tools of the trade. I replace them when I need to. I operate my business on a how much money are we making a 1/4, 1/2, 3/4, and year. I am going to just use an easy round number of $100 dollars an hour. Lets say I go to the job and look at it and with the equipment I have it is going to take 6 hours so the price is $600. This includes groundsman and equipment. Now lets say gas goes up and I am underbidding my competitors then maybe I raise it to $110 and hour. The best part of this method is at the end of the day you can check yourself on how you did on your bid. If you bid 6 and took 10 then stupid you. If you bid 6 and took 3 then take the wife out for supper

It works for us. I do have an hourly rate on the chipper (we operate), skid loader and trailer rental and the bucket truck odd job usage (again we operate.)

This may work on jobs that take a couple of days but what do you do on a 3-4 week long project. What if it's prevailing wage? What if you are chipping a large amount of debris and leaving it on site? What if the job is very labor intensive and requires a small amount of equipment?

If you know what each piece of equipment cost to operate and what your wage rate is, you can effectively bid any job. Without this knowledge you can be very high or low. Some just avoid these jobs instead........how many people want to avoid increasing their receipts by $50 - $100K per year. Larger jobs can offer large increases in revenue but if you don't know what to charge they can destroy a company.

You also can have a great degree of confidence in knowing you are charging a fair and profitable price.

Once again my $.02

 

[Redbull]

Xander wrote:

""If you know what each piece of equipment cost to operate and what your wage rate is, you can effectively bid any job. Without this knowledge you can be very high or low. Some just avoid these jobs instead........how many people want to avoid increasing their receipts by $50 - $100K per year. Larger jobs can offer large increases in revenue but if you don't know what to charge they can destroy a company.

You also can have a great degree of confidence in knowing you are charging a fair and profitable price.""


This is my point. If you don't know what it costs to operate, how can you give a fair bid and how will you know what to set aside to replace equipment?

 

[xander9727]

You can't........and won't.

It's called a WAG.

 

[begleytree]

xander- good one man!!
-Ralph