Custom Rate Calculator

About the Custom Rate Calculator

Custom rates are the prices charged for performing farm operations (tillage, planting, spraying, harvesting) on someone else's land using your own equipment and labor. Setting the right custom rate requires knowing your machine costs per hour, your productivity (acres per hour), and operator labor cost.

The custom rate must cover all equipment costs — depreciation, interest, insurance, housing, fuel, repair, and maintenance — plus operator labor and a profit margin. If the rate is too low, you lose money on every acre; too high, and you lose business to competitors.

University extension services publish annual custom rate surveys that provide regional benchmark rates. This calculator helps you compute your own cost-based rate and compare it to the market.

When This Page Helps

Whether you hire custom work or provide it, knowing the cost-based custom rate helps anchor pricing discussions. Hiring below cost means the custom operator is subsidizing the work, while charging below cost means the job is losing money on every acre served.

How to Use the Inputs

1. Enter the machine cost per hour (ownership + operating costs).
2. Enter the field capacity in acres per hour.
3. Enter the operator labor cost per hour.
4. Review the calculated custom rate per acre.

Example Calculation

Tips & Best Practices

• Include all machine costs: fuel, repairs, depreciation, insurance, and interest on investment.
• Use realistic field capacity — actual, not theoretical — accounting for turns and field shape.
• Add a profit margin of 10-20% above cost for sustainable custom work pricing.
• Compare your computed rate to ISU or your state's custom rate survey.
• Track actual hours and costs to refine your rate estimate over time.
• Consider travel time to remote fields — it reduces effective productivity.

Cost-Based vs. Market-Based Rates

Your cost-based rate may differ from market rates. If your cost is below market, you have a competitive advantage. If above, your equipment may be too expensive or underutilized. Use market rates to set prices but track your costs to ensure profitability.

Custom Work as a Revenue Stream

Many profitable farms supplement crop income with custom work. The incremental revenue helps cover fixed equipment costs that exist regardless. However, custom work must not compromise timeliness on your own acres — that trade-off can be costly.

Custom Rate Trends

Custom rates generally move with equipment ownership cost, fuel, repair expense, labor, and local field conditions. Published extension surveys are still useful as market anchors, but your own field-capacity and cost records matter more than any single regional average. Reviewing fresh local survey data alongside your own numbers helps keep pricing competitive and profitable.

Frequently Asked Questions

• What's included in machine cost per hour?

  Machine cost per hour includes depreciation (purchase price minus salvage over useful life), interest on investment, insurance, housing/storage, fuel, lubricants, repairs, and maintenance. It captures both ownership costs and operating costs.

• How do I estimate acres per hour?

  Acres/hr = (Speed in mph × Width in feet × Field efficiency) / 8.25. For example, a 40-ft planter at 5.5 mph with 70% field efficiency = (5.5 × 40 × 0.70) / 8.25 = 18.7 ac/hr.

• Should custom rates include profit?

  Yes. The formula gives your break-even cost. Add 10-20% profit margin to ensure the custom operation is financially worthwhile. If market rates don't allow a profit margin, the custom work may not be worth offering.

• Where can I find published custom rates?

  State extension services (Iowa State, Purdue, Kansas State, etc.) publish annual custom rate surveys. USDA-NASS also publishes regional data. These surveys show median, low, and high rates for dozens of farm operations.

• How do custom rates differ by operation?

  Harvest custom rates are highest ($30-$50/ac) because combines are expensive. Tillage is moderate ($12-$25/ac). Spraying by ground is low ($7-$12/ac). Aerial application rates vary by application type and volume.

• Should I hire custom or own the equipment?

  Compare the annual custom hire cost to the annual ownership + operating cost of owning. If you farm enough acres, ownership is cheaper. For occasional or specialized operations, custom hire avoids the capital investment and maintenance burden.