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Formula for truck cost per hour

Discussion in 'Business Operations' started by Josh.S, Mar 1, 2007.

  1. Josh.S

    Josh.S LawnSite Bronze Member
    Messages: 1,085

    Here is a formula I made to find cost per hour for a vehicle. Although it looks clumsy, it should be fairly accurate. I haven't thought of a less complicated formula to accurately figured this problem out.

    I figured I would put this on here in case anybody else was wondering how to figure this. Basically all I did was find the total cost for owning the vehicle, then divide it by the years. If you wanted to, instead of using the actual price of the vehicle, you could just use how much money you will lose on depreciation before you plan to sell. Personally, I would rather use the price of the vehicle. It is always better to over estimate costs than to under estimate them, IMO.

    I'm sure finding cost per mile would be more accurate since there is a lot of rough averages, like mileage, but that defeats the purpose somewhat.

    P = Price
    H = Hours used per year
    Y = Number of years the truck will be used for
    R = Cost of repairs per hour of operation
    F = Fuel used per hour (in gallon(s))
    I = Insurance rate per year

    Cost per/hr = Price + ((I + ((F * Fuel Rate) + R) * H) * Y) / Y

    Just in case anybody doesn't know. * is multiply and / is divide.

    Make sure you follow the order of operations. (parenthesis first)

    Well, after all, there might be a somewhat practical use for basic algebra.
  2. MWHC

    MWHC LawnSite Member
    from Wyoming
    Messages: 205

    You may want to work in a salvage value for your truck. Large equipment purchases usually have a salvage value at the end of the period they are being used. (PRICE -SALVAGE VALUE) = P
  3. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Messages: 591

    I cant follow all of what you have going there, but here

    P = Price
    H = Hours used per year
    Y = Number of years the truck will be used for
    R = Cost of repairs per YEAR
    F = Actual fuel costs per year
    I = Insurance rate per year
    PP = Purchase Price
    SV = Salvage Value

    Cost per/hr = [(PP - SV)/Y + I + R + F]/H
  4. Josh.S

    Josh.S LawnSite Bronze Member
    Messages: 1,085

    Thanks, that is basically a simplified formula for what I was doing. I was figuring the cost of fuel and stuff per hour all in one formula, so that is why it was so confusing.

    Also, the reason I didn't do [price - salvage value] was because I would rather just take whatever I would sell the truck for as a bonus, I should have stated that though. :cool2:

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