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Equipment and labor are the two most tangible items in any bid. Materials are simple and "overhead" should be straight forward and adjusted annually. The idea that profit needs to be made on "equipment" goes against the idea of knowing your cost. Profit, is an item that should be placed at the end of "your cost" (see Vander Kooi). It is important that you know how much it will cost you to do any particular job. If the rental equipment cost you $200.00 then that is the cost (all items included), this is a seperate line item, treat it like a material cost. Do not worry about delivery, it should be part of the cost, but, know how long you plan to use the equipment and plug in that rate (5 days x 200.00 = $1000), plain and simple.
In the real world it would be nice to charge all of your own equipment at the same rate that rental companies use, however I can tell you, if you do this you will price yourself out of the game. Just like rental companies lower there rate over time, you also need to calculate any piece of equipmennt over time. Vander Kooi recommends 5 yrs. I like this because it is usually the life of a loan and at the point it makes a lot of sense to trade it in and capitalize on trade-in. Even if you do not trade it in, the cost of repairs go up and it may or may not be a wash.
I personally believe that if you where to rent all equipment to do a job and your competitor uses his own, your bid would be higher. This is not to suggest that you need to buy every piece of equipment to do any job you bid on. As a contractor you need to evaluate "how often" that piece of equipment will be used. If it is for one specific job, then rent, if however, you plan to do the type of work, then buy. For instance, if you plan on mowing lawns, then you need to buy rather than rent. Can you imagine the cost of a cutting if you had to rent every piece of equipment to perform that task.
Hope this helps.
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