The Basics: Diesel, Wages and the Cost of Running the Gear

These are the costs we see every day, and it is just too bloody easy to bring ourselves down with them.

It is pretty common in the ag sector that the customer supplies diesel, so it is fairly important we understand what our gear uses based on L/hr in different conditions.

At some point, we may be expected to supply it ourselves and forward the cost on, so from this point, work out and understand your usage.

When it comes to wages, we might pay a team member $50/hr.

Let us figure out what else is on top of that $50.

Wages: The $50/hr Team Member Might Not Cost $50/hr

We are in 2026 and the current super rate is 12%.

WorkCover is roughly 4% to 5%.

These are the two guaranteed must be paid.

The hidden cost, this is where it gets proper messy.

If and when applicable:

Working away from home allowance is not as common in ag.

Meals are pretty standard, although a lot of the time the customer supplies tucker to the crews.

Overtime is not as common in ag, because everyone would go broke.

Use of company assets, like staff driving work vehicles, is pretty common.

So on top of all of that, we need to consider the consumables: brake cleaner, oil, filters and all the other bits.

None of it is cheap and fairly priced anymore.

I cannot give you pricing on any of the above, but what I can say is these are the things that need to be added into your rates so your business can be fair to your customer and turn a profit so we can all eat.

The Cost of Replacing Gear and Keeping It Reliable

This is a trap for young players, unless something like COVID happens, then you will make money, but mate, that is a bloody fluke and not smart business.

Most businesses look at their bank account, see cash, and feel they are making money.

We seem to forget the gear is wearing out every hour and drops in value every single hour it is operating.

Let us look at depreciation in the simplest way possible.

We are not going to worry about tax and all that. The real focus here is what it costs to upgrade.

You buy a header for $1 million.

You plan to keep it for 5,000 rotor hours.

When it comes to that number, you trade it in and it is worth $400k, which is $600k less than the initial $1m purchase.

So the reality is every hour that rotor has spun, the header has cost $120 an hour in depreciation.

I will leave that question to you to figure out.

So the good old R&M kitty, repairs and maintenance to keep it reliable.

After all, no one is having a good day when we have wheels parked up in a high-pressure time.

New gear has warranties, but it is the downtime and waiting for the dealer to get to you to do repairs.

Warranty does not fix blown tyres or hydraulic hoses.

Old machines have no payments, but they have pump failures, engine failures or box failures.

When working out our hourly rate, we need to allocate a strict hourly figure for repairs, as an example $30 to $50/hr.

So If We Make a Profit on a Risk, We Should Be Able to Eat and Drink Beer

So as all the big business entrepreneurs and all these business summits will preach, risk equals reward and no guts no glory.

To most of the extent, it is true, but I am not going to go all magical on ya here.

I am just going to say you need to charge accordingly to be able to enjoy the life you want.

After all, we do a trade-off.

So what do we need to go to eat and drink beer?

That is the cream. Or the beer cream, depending on how you want to look at it.

So Here’s What We Briefly Touched On

So here it is, that formula we just broke down in a very simple structure.

But the question remains: does our rate now fall in line with what our machines are capable of per hour to ha from your customer’s point of view?

Diesel: (L/hr x Price) = $_____

Wages: (Your hourly rate + Super + WorkCover) = $_____

Gear: (Replacement Cost / Hours you keep it) = $_____

Repairs: (Estimated $30-$50/hr) = $_____

Subtotal: (Add 1, 2, 3 & 4) = $_____
This is your break-even.

The Beer Cream: (Subtotal x 20%) = $_____

YOUR RATE: (Subtotal + The Beer Cream) = $_____ PER HOUR

If we reduce their scale, their reliability and their responsibility, we will all feel it.

I must repeat myself: no price figure can be worth more than Respect, Reliability and Responsibility.

Rates should go both ways, but quality should always be priority.