{
  "slug": "farm-equipment-own-vs-custom-hire",
  "title": "Farm Equipment Own vs Custom Hire Calculator",
  "heading": "Own vs Custom Hire Equipment Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/farm-equipment-own-vs-custom-hire",
  "summary": "Break-even acreage where owning equipment beats hiring custom work.",
  "description": "Owning a combine, planter, or sprayer only makes financial sense above a certain acreage where the fixed ownership cost gets spread thin enough to beat what a custom operator charges per acre. This calculator compares annual ownership cost (depreciation, interest, insurance, and repairs) plus your own operating cost per acre, against a flat custom hire rate, and solves for the breakeven acres where the two lines cross. Below that acreage, custom hire is cheaper even though it feels like you're not building equity in iron; above it, ownership wins even after accounting for the fact that owned equipment sits idle part of the year. This is the same math custom operators use in reverse to price their services.",
  "formula": "Breakeven acres = annual fixed ownership cost ÷ (custom rate − owner operating cost per acre).",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=farm-equipment-own-vs-custom-hire",
  "inputs": [
    {
      "id": "purchasePrice",
      "label": "Equipment purchase price",
      "kind": "number",
      "hint": null,
      "default": 320000,
      "unit": "$",
      "min": 5000,
      "max": null
    },
    {
      "id": "usefulLifeYears",
      "label": "Useful life",
      "kind": "number",
      "hint": null,
      "default": 10,
      "unit": "years",
      "min": 3,
      "max": 25
    },
    {
      "id": "salvagePct",
      "label": "Salvage value",
      "kind": "number",
      "hint": null,
      "default": 25,
      "unit": "% of purchase",
      "min": 0,
      "max": 60
    },
    {
      "id": "interestRate",
      "label": "Financing/opportunity rate",
      "kind": "number",
      "hint": null,
      "default": 7,
      "unit": "%",
      "min": 0,
      "max": 15
    },
    {
      "id": "annualInsuranceRepairs",
      "label": "Annual insurance + repairs",
      "kind": "number",
      "hint": null,
      "default": 9000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "ownerOpCostAcre",
      "label": "Owner's fuel/labor cost",
      "kind": "number",
      "hint": null,
      "default": 14,
      "unit": "$/acre",
      "min": 0,
      "max": null
    },
    {
      "id": "customRateAcre",
      "label": "Custom hire rate",
      "kind": "number",
      "hint": null,
      "default": 32,
      "unit": "$/acre",
      "min": 1,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "breakevenAcres",
      "label": "Break-even acres to own",
      "format": "number",
      "hint": null,
      "primary": true
    },
    {
      "id": "fixedCost",
      "label": "Annual fixed ownership cost",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "depreciation",
      "label": "Annual depreciation",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "interestCost",
      "label": "Annual interest/opportunity cost",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Equipment purchase price: 320000 $",
      "Useful life: 10 years",
      "Salvage value: 25 % of purchase",
      "Financing/opportunity rate: 7 %",
      "Annual insurance + repairs: 9000 $",
      "Owner's fuel/labor cost: 14 $/acre",
      "Custom hire rate: 32 $/acre"
    ],
    "outputs": [
      "Break-even acres to own: 2,611",
      "Annual fixed ownership cost: $47,000",
      "Annual depreciation: $24,000",
      "Annual interest/opportunity cost: $14,000"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter equipment purchase price ($).",
      "Enter useful life (years).",
      "Enter salvage value (% of purchase).",
      "Enter financing/opportunity rate (%).",
      "Enter annual insurance + repairs ($).",
      "Enter owner's fuel/labor cost ($/acre).",
      "Enter custom hire rate ($/acre).",
      "Read your break-even acres to own on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "purchasePrice": 192000,
        "usefulLifeYears": 6,
        "salvagePct": 15,
        "interestRate": 4.2,
        "annualInsuranceRepairs": 5500,
        "ownerOpCostAcre": 8,
        "customRateAcre": 19
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "purchasePrice": 320000,
        "usefulLifeYears": 10,
        "salvagePct": 25,
        "interestRate": 7,
        "annualInsuranceRepairs": 9000,
        "ownerOpCostAcre": 14,
        "customRateAcre": 32
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "purchasePrice": 512000,
        "usefulLifeYears": 16,
        "salvagePct": 40,
        "interestRate": 11.200000000000001,
        "annualInsuranceRepairs": 14500,
        "ownerOpCostAcre": 22,
        "customRateAcre": 51
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Should I include my own labor cost in owner operating cost?",
      "a": "Yes, put a real wage on your time even if you're not paying yourself a check. Custom hire rates already have the operator's labor baked in, so leaving your own labor out understates ownership cost and makes owning look artificially cheaper than it is."
    },
    {
      "q": "Does this model account for timeliness value?",
      "a": "No, it's pure cost comparison. Owning equipment gives you control over planting and harvest timing, which has real yield value in years when custom operators are backed up during a tight weather window — that benefit isn't captured here and should be weighed separately."
    },
    {
      "q": "What if my acreage is close to the breakeven number?",
      "a": "Consider a middle path: partnering with a neighbor to share ownership and split fixed costs, or leasing equipment for the season instead of buying outright. Both can push the effective breakeven acreage down without full ownership commitment."
    },
    {
      "q": "How much does financing rate change the answer?",
      "a": "A lot on expensive equipment. Moving from a 5% to 9% interest/opportunity rate on a $300,000 combine adds roughly $6,000+ a year in cost, which on a typical custom rate spread can shift breakeven acreage by several hundred acres."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/farm-equipment-cost-per-acre",
    "https://www.revenuelab.fyi/toolbox/equipment-lease-vs-buy",
    "https://www.revenuelab.fyi/toolbox/no-till-fuel-savings"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Farm Equipment Own vs Custom Hire Calculator (https://www.revenuelab.fyi/toolbox/farm-equipment-own-vs-custom-hire)"
}