Buying the machine is a gut call
A machine you own bills nothing on the weeks it sits, and the note does not care.
Ownership swaps a variable cost for a fixed one. That is a good trade when the machine works enough hours to beat the rental rate and a bad one when it does not, and the difference is decided by utilization rather than by preference. Most owners buy on the monthly payment, which is the one number that says nothing about whether the machine earns.
Three moves, in order
Step 02: Equipment cost basis
A true internal rate per machine covering ownership, maintenance, fuel, and transport, charged to the projects that used it.
Other problems step 02 solves
Other things that go wrong
What owners ask
Should a contractor buy or rent equipment?
A machine you own bills nothing on the weeks it sits, and the note does not care. Ownership swaps a variable cost for a fixed one. That is a good trade when the machine works enough hours to beat the rental rate and a bad one when it does not, and the difference is decided by utilization rather than by preference. Most owners buy on the monthly payment, which is the one number that says nothing about whether the machine earns.
Which part of the system fixes this?
The step is number 02, equipment cost basis. A true internal rate per machine covering ownership, maintenance, fuel, and transport, charged to the projects that used it. It's drawn from chapter 2 of CONTROL: The Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M–$5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack sits, and your own job costing tells you where you sit, which is the number that pays payroll.
Where do I start?
Work out the true hourly cost of owning it, with ownership, maintenance, insurance and the hours you expect to meter.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 02 depends on step 01, job cost structure. Install it ahead of that and it produces numbers nobody trusts, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system these figures sit inside. More about the author.