In an industry where economic factors and weather events are constantly throwing curveballs, it is important to focus on what you can control.
Know Your Numbers
Right. Let’s get one thing straight. It has been said time and time again in all industries…you must know your numbers.
If you don’t know your numbers, you’re not running a business. You are playing a potentially very expensive game of roulette!!, and when there can be millions of dollars worth of machinery, implements, stock and overheads at play, no wonder it can keep you awake at night!
I Know, as contractors machinery is our passion – why else would you be in this industry? From modern equipment with the latest tech, trying to squeeze every last bit of efficiency out of a job, to vintage machinery loved and restored, it is all a passion.
However, when it comes to actually measuring what those machines are costing you, everything goes quiet.
Weird that aye.
So here’s a thought: maybe it’s time to stop being busy, and start being smart.
Measuring the numbers that matter:
- Running cost per machine hour (engine hours)
- Cost per hectare per job type
- Revenue per hectare per job type
- Repair, maintenance and downtime costs (ie: non-billable staff hours)
- Profit per job type
We all know how it ends when we don’t measure these metrics throughout the year,
you get your end-of-year financials back from your accountant,
as they shake their head like a disappointed parent,
and you sit there wondering how the hell you worked 80 hours a week and still ended up in the red, or close to it.
No one tells you where the money went. You certainly can’t explain it. But somehow, it’s gone. Like socks in the washing machine.
“I base my Prices on What is out There in the Market”
This is really just code for “I am not sure what my costs are”.
Let’s run a scenario: You hear your competitor is offering undersowing at $50/ha cheaper than your rate. If you do not clearly know your own numbers, you simply cannot react to this in a meaningful manner.
You could just drop your prices to join and feel like you are ‘competitive’, however you would be making the following concessions:
- You’re assuming your competitors did the math.
Spoiler: They probably didn’t. They likely picked a number to undercut and win the job. If you copy them, you’re not being competitive – you’re just joining the bad maths.
- You might be winning jobs… that are losing you money.
Let’s say the “market rate” is $180/ha. Sounds fine. But if your real operating cost is $160/ha and you’re working 1,000ha a year – that’s only $20,000 in margin before tax, breakdowns, mistakes, or downtime.
- You erode your ability to invest.
No margin = no new gear. No new gear = more breakdowns and inefficiencies. Suddenly you’re spending more time fixing things than doing work. You’re falling behind while still charging too little. New workers want to drive nice machinery.
- You join the race to the bottom.
By pricing off “the market” without knowing your own costs, you’re helping drive the entire industry down.
5. You lose sight of your business reality.
Your overheads, your gear, your crew, your travel distances — they’re not the same as someone else’s. So why should your price be?
How to Move Forward From Here.
If you are serious about staying in the game and not just working harder while slipping further behind—then it is time to make your numbers work for you. Stop reacting. Start leading.
Imagine quoting jobs with full confidence, knowing your true costs down to the machine hour. Imagine cutting through pricing noise with your own data – not guesswork.
When you truly understand what it costs you to run each machine, deliver each job, and manage each crew, you stop playing defence. You start making deliberate decisions—about pricing, upgrades, staffing and growth—with clarity, not guesswork.
This kind of control doesn’t just improve your bottom line. It changes how you sleep at night, how you talk to customers, and how you plan the next season.
Start pricing like a business owner, not another contractor trying to secure the job at all costs.