Time to Rethink the Rate Calculation

摘要

The rate calculation has not changed much over the years. I remember the days when we estimated the cost of gasoline for the pony engine to the penny and used the crazy assumption that "repairs, including labor" for a track type tractor came to 100 percent of "the depreciation charge." The world has changed. We no longer have pony engines, and we have both the data and the analytics needed to estimate the cost of "repairs, including labor" with reasonable confidence. Yet we still format the rate calculation in the same way. You estimate an ownership period and a utilization, determine the cost per hour for all the owning and operating cost categories, add them together, and believe that there is one number- expressed in $ per hour-that reasonably represents the likely cost of owning and operating the machine.