Tracking Fuel Costs and Machine Hours: Know Which Equipment Costs You Most Per Hour

Mark Wilson runs a profitable agricultural contracting business in Lincolnshire. Last year he purchased a used sprayer for £45,000—a great deal, he thought. The sprayer was 6 years old but looked good and the price was £15,000 below market.

After one season using it, Mark had a nagging feeling the sprayer was costing more than expected. Fuel consumption seemed high. It needed more repairs than his other equipment. But he didn't have hard numbers to know whether his feeling was accurate or just perception.

When Mark finally started tracking equipment costs properly—fuel, maintenance, repairs, and operating hours—the results shocked him:

Sprayer A (the "good deal"):

• 380 hours operated
• Fuel: £5,890
• Repairs & maintenance: £6,240
• Total: £12,130
• Cost per hour: £31.92

Sprayer B (newer, reliable machine):

• 420 hours operated
• Fuel: £5,320
• Repairs & maintenance: £2,180
• Total: £7,500
• Cost per hour: £17.86

The "bargain" sprayer was costing £14.06 more per hour to operate—nearly double. Over one season's 380 hours, Sprayer A cost £5,343 more than it should have if it matched Sprayer B's efficiency.

That £15,000 "savings" on purchase turned into £5,343 lost in Year 1.

Mark wasn't alone. Most agricultural operations don't know the true operating cost of their equipment because they don't track:

• Fuel consumption per machine
• Maintenance costs per machine
• Repair costs per machine
• Operating hours per machine
• Cost per hour calculations

Without data, operators make equipment decisions blindly:

• Which equipment should I replace next?
• Is this repair worth it or should I buy new?
• Am I pricing jobs correctly given equipment costs?
• Which equipment is most profitable?
• Should I keep old reliable equipment or upgrade?

Guessing costs thousands annually.

Here's how tracking equipment costs transforms profitability and decision-making.

The Hidden Equipment Cost Problem

Most farms and contractors track overall fuel purchases and maintenance expenses, but not cost per specific machine. This creates several blind spots:

Problem 1: Don't Know What Equipment Actually Costs

Typical Knowledge:

• "Fuel costs about £25,000 annually"
• "Maintenance and repairs run £18,000/year"
• "Equipment is expensive to run"

What You Don't Know:

• Which specific machines consume most fuel?
• Which machines require most maintenance?
• Cost per hour for each machine?
• Which equipment is profit drag vs. profit generator?

Result: Can't make informed equipment decisions.

Problem 2: Pricing Without Accurate Costs

Contractors pricing jobs:

• "Spraying costs about £18-22/acre"
• Based on guess-work and market rates
• Not based on actual equipment costs

Reality:

• If your sprayer costs £28/hour but competitor's costs £18/hour
• And you both price at £20/acre
• Competitor makes profit, you break even or lose money

Without cost data: Pricing is blind guessing.

Problem 3: Can't Identify Problem Equipment

Example: Farm has 3 tractors, similar age and model.

Without cost tracking, you see:

• All three run fine
• Maintenance bills seem normal
• Fuel costs seem reasonable

With cost tracking, you discover:

• Tractor #1: £22/hour operating cost
• Tractor #2: £19/hour operating cost
• Tractor #3: £34/hour operating cost (!)

Tractor #3 costs 55% more to operate than Tractor #2. You'd never know without tracking.

Investigation reveals: Tractor #3 has engine inefficiency (poor fuel economy) and has required three expensive repairs in past year. Time to replace or do major overhaul.

Problem 4: Repair vs. Replace Decisions Without Data

Common Scenario:

• Equipment breaks down
• Repair estimate: £4,500
• Should we repair or replace?

Without Cost Data:

• Gut feeling decision
• Often wrong choice

With Cost Data:

• Machine operates 300 hours annually
• Current cost per hour: £42 (very high)
• Repair will extend life 2 years
• But won't address high fuel consumption
• New machine: £28/hour operating cost
• Difference: £14/hour × 300 hours × 2 years = £8,400 savings
• Decision: Replace, not repair (£4,500 repair doesn't make sense vs. £8,400+ savings from replacement)

Problem 5: Don't Know If Jobs Are Profitable

Contractor accepts job: £4,800 for 200 acres of work

Estimated time: 16 hours

Perceived profit: £4,800 - £800 fuel/costs = £4,000 profit → Seems good!

Reality with cost tracking:

• Equipment A: 16 hours × £38/hour = £608
• Equipment B: 16 hours × £28/hour = £448
• Fuel: £340
• Labor: £240
• Total cost: £1,636
• Actual profit: £3,164 (not £4,000)

Knowing real costs shows:

• Job is profitable, but less than thought
• Future pricing should be £22-24/acre not £20/acre
• Equipment A's high cost is eating profit

What to Track: Complete Equipment Cost System

Effective equipment cost tracking requires capturing multiple data points:

1. Fuel Consumption

Track Per Machine:

• Fuel purchases allocated to specific equipment
• Fuel used per job (when possible)
• Fuel economy (gallons or litres per hour or per acre)

Methods:

Dedicated Fuel Tanks Per Machine (Best):

• Each machine has its own fuel storage
• Track refills per machine
• Most accurate

Fill-Up Tracking (Good):

• Record hours when fueling
• Record fuel amount
• Calculate consumption
• Example: "Added 140 litres at 247 hours, next fill 180 litres at 267 hours = 180 litres / 20 hours = 9 litres/hour"

Fuel Card Systems (Good for contractors):

• Assign fuel card to specific equipment
• Electronic tracking of all fuel purchases
• Reports by machine

Estimate If Necessary (Acceptable to start):

• Use manufacturer fuel consumption estimates
• Adjust based on actual usage patterns
• Better than no data

2. Operating Hours

Track Hours Per Machine:

• Equipment with hour meters: Read and log regularly
• Equipment without hour meters: Estimate or install aftermarket meters

Why Hours Matter:

• Calculate cost per hour
• Schedule maintenance properly
• Track utilization (is equipment earning its keep?)
• Depreciation calculation

How to Track:

• Digital systems log hours automatically per job
• Manual: Record hours weekly
• Photo of hour meter with date (simple backup)

3. Maintenance Costs

Track Per Machine:

• Routine maintenance (oil changes, filters)
• Parts replacement
• Labor costs (if paying shop or own labor value)
• Scheduled service costs

Example - Tractor Maintenance Costs:

John Deere 6120M - 2024 Maintenance
Jan 15: Oil change £145
Mar 3: Hydraulic filter £85
Apr 12: Air filter £65
May 8: Annual service £420
July 15: Coolant flush £180
Sept 22: Oil change £145
Oct 8: Tire repair £120
Dec 1: Pre-winter service £220

Total 2024: £1,380
Hours operated: 620
Maintenance per hour: £2.23

4. Repair Costs

Track Separately from Maintenance:

• Breakdown repairs
• Parts replacement (non-routine)
• Emergency service calls
• Major overhauls

Why Separate:

• Maintenance is expected/preventable
• Repairs indicate equipment problems
• High repair costs signal time to replace

Example:

• Tractor A: £340 repairs annually (normal wear)
• Tractor B: £3,200 repairs annually (problem machine)

5. Cost Per Hour Calculation

Formula:

Total Costs (Fuel + Maintenance + Repairs) ÷ Hours Operated = Cost per Hour

Example:

Combine:
- Fuel: £8,400 (240 hours)
- Maintenance: £2,800
- Repairs: £1,600
Total: £12,800
Hours: 240
Cost per hour: £53.33

What to Include:

• Fuel: Yes
• Maintenance: Yes
• Repairs: Yes
• Insurance: Optional (annual cost ÷ expected hours)
• Depreciation: Optional (but valuable for complete picture)
• Operator wages: Usually tracked separately

6. Profitability by Equipment

Equipment Revenue vs. Cost:

• How much revenue did equipment generate?
• What did it cost to operate?
• Net profit per machine

Example - Sprayer Annual Summary:

Revenue (480 hours × £35/hour average): £16,800
Costs:
- Fuel: £4,200
- Maintenance: £1,850
- Repairs: £720
- Total: £6,770

Net Contribution: £10,030
ROI: 148%
Cost per hour: £14.10

Digital Equipment Cost Tracking Systems

Manual equipment cost tracking is possible but tedious. Digital systems automate much of it:

Automatic Hour Tracking

System Records:

• Which equipment used on which job
• Start and stop times
• Total hours per job
• Cumulative hours per machine

Example:

Job: Fertilizer spreading - Johnson Farm
Equipment: Tractor #2 + Spreader #1
Hours: Tractor #2 (6.5 hours), Spreader #1 (6.5 hours)
Auto-recorded in equipment logs

Benefit: No manual hour recording needed.

Fuel Cost Allocation

Track Fuel Per Machine:

• Record fuel purchases
• Allocate to specific equipment
• Automatic fuel cost per hour calculation

Example Entry:

Fuel Purchase
Date: April 15
Equipment: Tractor #2
Amount: 180 litres
Cost: £234
Hours at fill: 247

System calculates: £234 / hours since last fill = fuel cost per hour

Maintenance Cost Tracking

Linked to Equipment:

• Maintenance logged against specific machine
• Cost automatically added to equipment total
• Running cost per hour updated

Example:

Maintenance: Oil change - Tractor #2
Cost: £145
Date: April 3
Hours: 252

Equipment cost summary automatically updated:
- Total maintenance cost: £1,180 YTD
- Maintenance per hour: £4.70

Cost Per Hour Dashboard

Visual Display:

Equipment Cost Summary

Tractor #1: £24.50/hour (380 hrs) ✓ Normal
Tractor #2: £22.10/hour (420 hrs) ✓ Good
Tractor #3: £38.80/hour (290 hrs) ⚠️ High

Sprayer #1: £18.20/hour (480 hrs) ✓ Excellent
Sprayer #2: £31.40/hour (380 hrs) ⚠️ High

Combine #1: £52.30/hour (240 hrs) ✓ Normal

Instantly See:

• Which equipment costs most/least
• Problem equipment (unusually high costs)
• Equipment performance trends

Real-World Case Studies

Case Study 1: UK Contractor - Equipment Decision

Operation: Thompson Contracting, Yorkshire
Decision: Replace aging sprayer or keep running?

Previous Approach: Gut feeling and breakdown frequency

The Situation:

• Sprayer is 12 years old
• Still runs but requires frequent repairs
• Owner uncertain whether to repair again or replace

Cost Tracking Data:

12-Year-Old Sprayer:
- Hours operated: 380 annually
- Fuel cost: £6,240 (poor fuel economy)
- Maintenance: £1,850
- Repairs (past 2 years average): £4,200 annually
- Total annual cost: £12,290
- Cost per hour: £32.34

New Sprayer (estimate):
- Purchase: £85,000
- Expected fuel cost: £4,200 annually (30% better economy)
- Maintenance: £1,200
- Repairs: £400 (minimal first years)
- Total annual cost: £5,800
- Cost per hour: £15.26
- Plus depreciation: £8,500/year (10-year life)

Analysis:

• Operating cost savings: £6,490 annually
• Depreciation cost: £8,500 annually
• Net cost: £2,010 additional annually

But:

• Old sprayer likely to need £6,000+ repair within 2 years
• Downtime risk during critical spraying windows
• Fuel savings alone: £2,040 annually
• Maintenance/repair savings: £4,450 annually

Decision: Replace sprayer.

Result:

• New sprayer operated at £15.26/hour (vs. £32.34 old)
• Zero breakdowns Year 1 (vs. 3 previous year)
• Client work reliability improved
• Fuel savings: £2,100 Year 1
• Repair avoidance: £4,200
• Total Year 1 value vs. keeping old: £6,300
• Break-even on decision: 5-6 years (accounting for all factors)

Owner Quote: "Cost tracking gave me data to make the decision confidently. I could see exactly what the old sprayer was costing and calculate precisely what the new one would save. The decision wasn't emotional or guesswork—it was math. And the math said replace."

Case Study 2: Large Farm - Equipment Efficiency

Operation: Henderson Farms, Iowa
Fleet: 6 tractors, all similar age and model

Assumption: All tractors have similar operating costs

Cost Tracking Revelation:

Tractor #1: £21.80/hour (operator: Tom)
Tractor #2: £19.40/hour (operator: Mike)
Tractor #3: £34.20/hour (operator: James) ⚠️
Tractor #4: £22.50/hour (operator: Sarah)
Tractor #5: £20.10/hour (operator: Maria)
Tractor #6: £23.80/hour (operator: rotates)

Question: Why is Tractor #3 costing 76% more per hour than Tractor #2?

Investigation:

• Same make/model tractors
• Similar hours
• Tractor #3 breakdown frequency: 4× higher
• Fuel consumption: 28% higher
• Operator: James (aggressive operator, runs equipment hard)

Root Causes Found:

1. Tractor #3 has engine inefficiency (needs service)
2. Operator James runs equipment at high RPMs constantly (wastes fuel)
3. Operator James misses daily maintenance checks (causes breakdowns)

Actions Taken:

1. Engine service on Tractor #3 (£1,200)
2. Operator training for James on fuel-efficient operation
3. Daily maintenance compliance requirement (digital checklist)
4. Monthly cost review with operators (awareness of costs)

Results After 6 Months:

• Tractor #3 cost: £34.20 → £23.10/hour (32% improvement)
• Fuel consumption: Down 22%
• Breakdowns: 4 → 0
• James' operational awareness improved
• Annual savings: £3,234 (Tractor #3 operates ~290 hours/year)

Farm Manager Quote: "We never would have known Tractor #3 was a problem without cost tracking. It ran fine, just cost a fortune. The data revealed both equipment and operator issues we could address. The visibility alone changed operator behavior—when people know their equipment costs are being tracked, they take better care."

Case Study 3: Custom Harvester - Pricing Accuracy

Operation: Williams Custom Harvesting
Challenge: Competitive pricing while maintaining profitability

Previous Approach: Price based on market rates and gut feel

Cost Tracking Implementation:

• Tracked all combine operating costs
• Calculated precise cost per hour
• Analyzed profitability by job type

Results:

Combine Cost Per Hour: £48.20

Job Analysis:
Wheat Harvest (typical pricing £40-45/acre):
- Average rate: 12 acres/hour
- Revenue: £480-540/hour
- Cost: £48.20/hour
- Net: £431.80-491.80/hour ✓ Excellent

Corn Harvest (typical pricing £55-65/acre):
- Average rate: 8 acres/hour
- Revenue: £440-520/hour
- Cost: £48.20/hour
- Net: £391.80-471.80/hour ✓ Excellent

Soybeans (typical pricing £35-40/acre):
- Average rate: 10 acres/hour
- Revenue: £350-400/hour
- Cost: £48.20/hour
- Net: £301.80-351.80/hour ✓ Good

Rice (wet conditions, tough harvest):
- Pricing: £50-60/acre
- Average rate: 4 acres/hour (slow due to conditions)
- Revenue: £200-240/hour
- Cost: £48.20/hour
- Net: £151.80-191.80/hour → Lower but acceptable

Insight: Rice harvest is least profitable per hour despite higher per-acre rate because work is slower.

Pricing Adjustments:

• Wheat/corn: Maintain pricing (highly profitable)
• Soybeans: Small increase (£38-43/acre) - market supports it
• Rice: Increase to £65-75/acre or decline jobs (low profitability not worth tie-up)

Results After Pricing Adjustment:

• Overall profitability: Up 18%
• Declined 3 rice jobs (low-profit)
• Capacity used for additional profitable wheat/corn work
• Annual net profit increase: £32,000

Owner Quote: "Before cost tracking, I thought all our work was similarly profitable—just charging market rates. The data showed huge profitability differences between crop types. Some jobs were tying up my equipment for barely more than costs. Now I price based on data and focus on the most profitable work."

Implementation: Building Your Cost Tracking System

Week 1: Equipment Inventory & Baseline

List All Equipment:

• Make, model, year, serial
• Current hours (if hour meter)
• Estimated annual hours

Estimate Current Costs (rough):

• Annual fuel consumption per machine (gallons/litres)
• Annual maintenance costs per machine
• Recent repair costs

Time: 3-4 hours

Week 2: Set Up Tracking System

Digital System (Recommended):

• Farm management software with equipment cost tracking
• Enter all equipment
• Configure cost categories (fuel, maintenance, repairs)
• Set up automatic hour logging if available

OR Manual Tracking:

• Spreadsheet with equipment tabs
• Record: Date, hours, cost type, amount
• Calculate cost per hour manually

Time: 2-3 hours

Week 3: Start Recording

Begin Tracking All Costs:

• Every fuel purchase allocated to equipment
• Every maintenance cost logged to specific machine
• Record hours regularly (daily or weekly)
• Track repair costs as they occur

Train Team:

• How to log costs (if operators responsible)
• Importance of accurate tracking
• How to record hours

Month 2-3: Build Data

Continue Consistent Tracking:

• Every cost recorded
• Every fuel purchase allocated
• Hours logged regularly

Begin Seeing Patterns:

• Which equipment costs most?
• Fuel consumption rates
• Maintenance frequency

Month 4+: Analyze and Act

Review Data:

• Cost per hour by machine
• High-cost equipment identified
• Profitability by job type

Make Decisions:

• Equipment maintenance needs
• Repair vs. replace analysis
• Pricing adjustments
• Operator performance discussions

Continuous Improvement:

• Monthly cost review
• Adjust operations based on data
• Track improvements over time

Cost-Benefit Analysis

Investment

Software (if using digital system):

• Free plan: £0 (basic cost tracking)
• Small Team: £79/month = £948/year
• Time to set up: 5-6 hours

OR Manual Tracking:

• Spreadsheet: £0
• Time to maintain: 2-3 hours monthly

Returns

Better Equipment Decisions:

• Avoid keeping high-cost problem equipment
• Value: £3,000-8,000 annually (from case studies)

Accurate Pricing:

• Price jobs based on real costs, not guesses
• Profitability improvement: 10-20%
• Value: £5,000-15,000 annually (depending on operation size)

Fuel Efficiency:

• Identify high-consumption equipment or operators
• Improvements: 8-15%
• Value: £2,000-6,000 annually

Maintenance Optimization:

• Identify high-maintenance equipment
• Address root causes
• Value: £1,500-4,000 annually

Total Annual Value: £11,500-33,000

ROI: 1,115-3,383% (even accounting for software and time)

Conclusion: Know Your Numbers

Most agricultural operations don't know their true equipment costs. They guess, estimate, and assume—and they lose thousands annually because of it.

Equipment cost tracking reveals:
✅ Which machines cost most to operate
✅ Problem equipment draining profits
✅ Whether pricing is accurate
✅ When to repair vs. replace
✅ Operator efficiency differences
✅ Job type profitability

Stop guessing. Start knowing.

Frequently Asked Questions

Is this worth the time for small operations?

Even small operations benefit. If you have 3-5 pieces of major equipment, knowing which costs £20/hour vs. £35/hour matters. The time investment is minimal (2-3 hours monthly for manual tracking, near-zero for digital), and even small operations save £3,000-8,000 annually from better equipment decisions.

How accurate does tracking need to be?

Reasonable accuracy is sufficient. You need to know if equipment costs £25/hour vs. £35/hour, not whether it's £28.42 vs. £28.67. Fuel allocation can be estimated, maintenance costs rounded. 80% accuracy is far better than 0% tracking.

What if multiple operators use same equipment?

Track costs by equipment first, then optionally analyze by operator. Advanced: Track which operator used which equipment when, correlate with costs, identify operator-specific patterns. Most operations focus on equipment costs first, operator efficiency second.

Should we include depreciation in cost per hour?

For complete picture, yes. Simple depreciation: Purchase price ÷ expected life (hours or years) = depreciation per hour/year. Example: £60,000 tractor ÷ 10 years ÷ 500 hours/year = £12/hour depreciation. Add to operating costs for full cost picture. Most contractors track operating costs separately from depreciation/capital costs.

How do we track fuel for equipment sharing fuel source?

Options: (1) Fill each machine from separate tank/container, measure amount; (2) Install fuel meters on your bulk tank; (3) Estimate based on hours × manufacturer fuel consumption rate; (4) Fill-up method (record hours and fuel amount each time you fuel). Even estimates better than no data.

What about equipment used on own farm vs. contract work?

Track costs the same regardless. For contractors doing own farming, cost data shows true cost of own-farm work (helps with farm vs. contract profitability decisions). Some operations allocate costs differently for accounting, but underlying cost tracking remains the same.

Track equipment costs and know which machines make you money. Start tracking free for 30 days →

Related Articles:

• Equipment Maintenance Tracking: How Digital Logs Cut Breakdowns by 40% and Save Thousands
• Building a Complete Equipment Database: Why You'll Thank Yourself When It's Time to Sell
• Do You Know Which Jobs Lose Money? 35% of Contractors Don't Track Job Profitability
• From Job Sheet to Invoice in 5 Minutes: Streamline Agricultural Billing and Get Paid Faster