The $160-a-Day Truck
Your truck is not a reward. It’s equipment, and your customers should be paying for it.
Over the years I’ve talked with a lot of young landscape contractors, and there’s one line I hear fairly often: “Someday, when I get a little money in the bank, I’m going to buy a new truck.”
The contractor saying it is usually driving an older truck that’s seen better days. Maybe it’s unreliable, maybe it’s expensive to maintain, or maybe it simply doesn’t represent the image they’re trying to build for their company. They want something better. They just don’t think they can afford it.
Well, I’m going to challenge that thinking. Your truck isn’t something you buy once you’ve finally made enough money. It’s a piece of equipment your business needs in order to operate, and just like every other piece of equipment, your customers should be paying for it.
Let me explain.
Let’s Buy a $100,000 Truck!
That’s right: a brand-new, beautiful crew truck with your company name professionally wrapped on the sides. A hundred thousand dollars! Sounds pretty intimidating, doesn’t it?
Let’s assume you finance the entire purchase over five years at 7% interest. That puts your payments at approximately $1,980 per month. Now add insurance, fuel, maintenance, tires, registration, and the other operating expenses, and here’s what that truck might actually cost your business each year:
Expense | Annual Cost |
Financing payments | $23,761 |
Commercial insurance | $3,000 |
Fuel | $6,000 |
Maintenance and tires | $2,000 |
Registration and miscellaneous | $500 |
Total annual cash costs | $35,261 |
10% contingency | $3,526 |
Annual cost recovery target | $38,787 |
The company wrap is already included in the original $100,000 purchase price.
Now let’s assume your company works 50 weeks per year, which allows for holidays and some time off. At 40 billable hours per week, that’s 2,000 billable hours annually. Divide that $38,787 by 2,000 hours and you get approximately $19.39 per hour, or $155.15 per eight-hour day. Let’s round that up to $160 a day.
That’s what you need to recover through your estimates to cover the truck’s annual cash costs, contingency included, before any additional overhead or profit.
But What If You Can’t Bill 2,000 Hours a Year?
It’s a fair question! Depending on where you operate, 2,000 billable hours a year may not be realistic. In some regions, winter weather, seasonal slowdowns, or other conditions can substantially reduce the number of days your crews can work.
That’s okay, because the solution is simple: know your numbers! If your company can reasonably expect only 1,500 billable hours per year, divide your annual truck cost by 1,500 instead of 2,000. Using our example, here’s how the numbers change:
Annual Billable Hours | Hourly Cost | 8-Hour Day |
2,000 | $19.39 | $155.15 |
1,800 | $21.55 | $172.39 |
1,600 | $24.24 | $193.94 |
1,500 | $25.86 | $206.86 |
1,200 | $32.32 | $258.58 |
All of these figures include our 10% contingency but exclude additional overhead and profit.
Your job is to determine how many billable hours you can realistically expect in your particular region and operation, and then establish an hourly or daily equipment rate that recovers those costs. The truck doesn’t suddenly become a bad investment because you work fewer hours. You simply need to account for those hours properly when you price your work.
Now, Who Pays for That Truck?
Your customers!
When you prepare an estimate for a landscape installation, you include the labor, materials, equipment, subcontractors, and other costs required to perform the work. So why would you leave out the truck? It’s equipment! It’s no different from the mower, skid steer, trailer, or compactor you use on the job.
If your crew truck costs $160 a day to own and operate, that cost belongs in your estimates. It doesn’t matter whether you show it as a separate equipment charge or fold it into your crew’s daily rate; what matters is that you account for it. You’re not asking the customer to buy you a truck. You’re charging for the equipment necessary to provide the service they’ve hired you to perform.
That’s not an extra expense. That’s the cost of doing business.
Your Truck Might Cost Less Than One Employee!
There’s another way to look at that $160 per day. Let’s say you’re paying a crew member $20 per hour. You might think that employee costs you $160 for an eight-hour day.
Not even close!
Once you account for payroll taxes, workers’ compensation insurance, benefits, paid time off, unproductive time, and the employee’s share of company overhead, that $20-per-hour employee might actually require $45 to $55 per billable hour to cover the full cost of employing them. That’s $360 to $440 per eight-hour day, before any additional profit. Compare that with our brand-new $100,000 crew truck at approximately $160 per day, and the employee could cost your company more than twice as much per billable day as the truck!
Now, I’m not suggesting that employees are too expensive. Quite the opposite. Good employees are essential to a successful landscape business. I’m simply putting the cost of that beautiful new truck into perspective. You wouldn’t expect your employees to work without accounting for their full cost in your estimates. So why would you expect your truck to work for free?
Both are necessary resources for operating your company. Both have costs that must be recovered through the work you perform. And both should be accounted for before you calculate your profit.
And Look What That $160 a Day Gets You!
For that $160 a day, you’ve got a brand-new, reliable crew truck. It’s under warranty, which reduces your exposure to unexpected major repair costs, and it’s less likely to break down and leave your crew sitting idle. It’s clean, attractive, and professionally wrapped with your company name and contact information.
When you pull into a customer’s driveway, that truck makes a statement about your company before anyone even steps out of the cab. It projects professionalism, success, and confidence, and let’s face it, customers notice these things. If someone is spending $30,000, $50,000, or more on a landscape project, they might appreciate seeing a professional-looking company arrive with clean, reliable equipment. They’re entrusting you with their property and their money, and your appearance is part of the impression you make. Besides, that new truck probably isn’t going to leave a puddle of oil or transmission fluid on their beautiful driveway!
There’s another benefit, too. That professionally wrapped truck is a rolling advertisement. Every time it travels through a neighborhood or sits at a jobsite, it’s promoting your business.
And after five years, when you’ve finished making the payments, you still own the truck. It has resale or trade-in value that can help fund its replacement. Not bad for a piece of equipment you’ve properly accounted for in your estimates.
Stop Paying Business Expenses Out of Profit
This is where I think a lot of young contractors get themselves into trouble. They estimate their jobs based on labor and materials, maybe add a little for overhead, and hope there’s enough left over to make a profit. Then, when they need a new truck or piece of equipment, they look at their bank account and wonder how they’re going to pay for it. But the cost of that equipment should have been part of their pricing all along.
Profit is not supposed to be the money you use to cover expenses you forgot to include in your estimates.
Your business needs to generate enough revenue to cover its operating costs, including equipment, employee compensation, insurance, overhead, and all the other expenses associated with doing business. Then, after those costs are accounted for, you have profit. That’s the whole point of knowing your numbers.
And here’s something else to consider. When you buy a truck for your business, you’re not simply spending money. You’re acquiring an asset that helps your company produce revenue. The truck has a job to do, just like your employees and the rest of your equipment.
It’s Not Just About Trucks
The same principle applies to everything you purchase for your company, whether it’s a $60,000 skid steer, a $15,000 mower, a $10,000 trailer, or a $2,000 compactor. Every piece of equipment has an ownership and operating cost. You need to know what that cost is, determine how much productive use you can reasonably expect from it, and incorporate that cost into your estimates.
Some equipment may be used every day, while other equipment might only be used occasionally, and that affects whether you should buy, finance, lease, or rent it. But the underlying principle doesn’t change: your customers pay for the resources required to do their work. That’s how a properly managed business operates.
Think Like a Business Owner
I don’t want you to finish reading this article and immediately run out to buy a $100,000 truck. I want you to change the way you think about equipment.
Instead of saying, “I can’t afford a new truck,” start asking, “What would that truck cost my business per billable hour, and can I recover that cost through my work?” That’s a much better question.
Of course, you need to have enough work to support the investment. You need to manage your cash flow, prepare accurate estimates, and meet your revenue goals. But those are the responsibilities of operating a business. The important thing is to stop treating essential business equipment as something you purchase only after you’ve accumulated enough leftover money.
Your truck is not a personal reward for working hard. It’s a business asset. It has a cost. And that cost belongs in your estimates.
Know your numbers. Charge for your equipment. Let your business pay for itself.
And maybe, just maybe, you’ll discover that you can afford that beautiful new truck after all.
~ Eric
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