when to buy new, trade, or keep old

Discussion in 'Lawn Mowing' started by meets1, Mar 16, 2005.

  1. meets1

    meets1 LawnSite Gold Member
    Posts: 3,787

    I did a search and really no one has said what they do or practise regarding purchase of new equipment.

    Some were like if the money is there I buy - no debt. Others - every three 3 years, and yet others after they have 1,000 's of hours on them.

    When deciding what to do is your decision based upon tax purposes, or amount of hours, or amount of years on a machine?

    I realize there are many factors such as size of operation you guys run to being able to trade every couple years to have some new equipment again. You have to admit - it is fun to have new equipment!!

    I guess for myself this winter we had little snow for NW Iowa. Well I am thinking I can easily gain and extra year or two now on our snow equipment. Just no wear and tear, hours on machines, ect. I realize that plays into the depriciation methods on our taxes but then why not upgrade other equipment that needs to be updated?
     
  2. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    For me it is simply a business issue on equipment. When it is not longer a productive piece in that repairs/parts/service began costing more than it is making me or the equipment is worth it's time to buy. I also do not finance any mowers.
     
  3. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    For my business, it's basically the number of hours that determines what goes and when. I'm a real preventative maintenance freak (learned that from my days at Hertz) and keep stuff up to snuff at all times. I've probably 86ed some stuff before I had to over the years, but the last thing I want is downtime for a piece of equipment.
     
  4. Mowman29

    Mowman29 LawnSite Member
    from OH
    Posts: 106

    Why not when you can get them for intrest free for 12-18 months still make payments even though they say no payments also. It using there money for free. You could easily pay off 8,000 in 12 months. Yes it a high payment but what if you paid for it in 2 years then it really not that bad because the intrest is only usually 3.9%. for year 2. it basicly 300 a month. Cheaper than some new Truck payments. that cash that you spent on a new mower would be better put on a New Truck Every 3-years without the trade in because you would lower your Truck payments at 300 a month. so Really It equals out. But Truck Intrest is usually higher.
     
  5. lsylvain

    lsylvain LawnSite Senior Member
    Posts: 777

    Here is the thing comming from a full time accountant and ex lawnman. It is time to get knew equipment when what you have is no longer productive or a newer machine is so much more productive than the one you have that it warrents the cost.

    Example: (I'm just making the numbers up for easy calculations, assume after tax costs)

    Old machine yearly cost $2000
    New machine yearly cost $4000

    Old machine gets all your jobs done in 40 hrs a week including break down time etc.

    New machine gets everything done in 35 hrs a week.

    Assuming your empolyment cost are $10/hr and you run 32 cuts a year, you save $1600 in labor.

    End result = you paid $2000 to save $1600 so you lost $400. but if your emp cost are $12.50/hr, or the new machine saved you 6.25 hours a week you break even.

    The point is, it is time to buy new equipment when the new equiptment pays for itself. So if you use the 10/hr saving 5 hrs a week example you should run the old equip until your cost go up $400.

    What if you are a sole operator? The answer is simple you get new equipment when the old machine cost more to run than the new, or your old machine cannot get all your jobs done while the sun is up.
     
  6. Skookum

    Skookum LawnSite Senior Member
    Posts: 675

    I am cheap. I have a Toro 44" Proline WB that is a 1995 that I bought new in 1996. I got it cheaper then new model since it was previous years model. I think I paid right at $2,300 plus got a set of jungle wheels in the deal.

    I still use it every week when I mow. Now, 9 years later I have replaced transmission twice, 2 sets of tires, 2 sets of belts, lower seal on motor, electric PTO, and one pull rope. Repairs come in at about $1000. On that mower alone by it's use only, I would say it has helped me produce about $130,000.

    4 years ago I called the dealer and had them prep me a new hydro unit. I got there to pic it up and it was previous years model but it was a belt drive and he did not have a new model year hydro. I left and decided I did not need it anyway for $5,200. Last summer I tried to buy a one year old model from a LCO I know. It was like new. When I could not get him to come down off what he paid for it, I decided again, I didn't need it

    It still cuts like the day I bought it. So, I guess I'll keep it going until I decide there is something wrong with it that I cannot fix for a few hundred dollars.
     

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