To know the true cost of a field operation, spread machinery costs over acres covered — ownership plus operating cost, divided by annual acres, gives the per-acre machine cost.
The example
$18,000 total, 1,200 acres.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 18000 / 1200 | — |
| 3 | Per acre | → $15.00 |
The formula
The formula:
How it works
How it works:
- Ownership cost = depreciation + interest + insurance + housing — the fixed cost of having the machine.
- Operating cost = fuel + lube + repairs + labor for the season.
- Add them and divide by acres covered per year for cost per acre.
- More acres lowers per-acre cost — spreading fixed ownership over more work.
Machinery is a spreading game. The ownership half of the cost is fixed whether the combine runs 400 acres or 1,400 — so per-acre cost falls fast as acres rise. That math drives custom-hire and machinery-sharing decisions: below a certain acreage, hiring the operation done is cheaper than owning the iron. Compute your per-acre owned cost and compare it to the custom rate.
Try it: interactive demo
Ownership, operating, acres/year.
Variations
Operating only
Variable per acre:
Own vs custom-hire
Compare to a rate:
Break-even acres
Where owning wins:
Pitfalls & errors
Ownership + operating. Include both fixed and variable machine costs.
Acres covered. Use actual annual acres for that machine, not farm size.
Zero acres. An unused machine gives #DIV/0!.
Practice workbook
Frequently asked questions
How do I calculate machinery cost per acre in Excel?
What's in ownership cost?
When should I custom-hire instead?
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