Accurate Internal Charge Rates Require the Best Data

The equipment manager with the best data is the one who wins contracts.

As the heavy equipment data experts, we remain close to our customers. We also understand trends in the industry as they unfold. We have found that, as a rule, our contractor customers call in around September and November, and again in February and March at the time their construction season is ending (in the fall) or starting up again (later winter and early spring). The downtime in the off-season is often used to update internal charge rates with new usage data that was collected during the construction season. If rates are not updated and benchmarked frequently, these contractors will find themselves losing money due to rates that are one (or more) steps behind.

To successfully bid competitive rates once the season starts, it is imperative that contractors know and understand basic costs and benchmark them to the broader market. This is to ensure that they are: (1) underbidding the competition while covering base costs; and (2) bidding high enough that money is not left on the table. This delicate balancing act requires vetted and verified data from the widest sources, whose accuracy and precision cannot be overstated.

“It is not possible to overstate the importance of reliable and competently set equipment rates in the estimating process.”

According to Mike Vorster, the prominent equipment economist, the difficulty in setting charge rates “comes from the fact that rates are estimates of future costs that are uncertain and in many cases unknown…Accuracy in an estimated rate does not come from the complexity of the method you use to perform the calculation, it comes from the quality and the stability of the data you have available to perform the calculation.” In Vorster’s view, “It is not possible to overstate the importance of reliable and competently set equipment rates in the estimating process.”

Complicating this potentially simple calculation is the fact that equipment managers and contractors often buy new machines in February and March during auction season and find themselves unprepared without historical ownership and operating cost data for those machines.

The MagikMe Equipment Internal Charge Rate Calculator enables contractors and estimators to  accurately calculate internal charge rates for usage of heavy equipment assets with cost estimates and trends based on the data collected from hundreds of thousands of models monthly. This breadth of data inventory provides peace of mind, with the most comprehensive, unbiased database for ownership and operating costs and the most models covered. Already the industry standard for calculating ownership and operating costs in the form of our Rental Rate Blue Book, MagikMe Equipment offers data that is timely, trusted, and targeted.

To learn how MagikMe Equipment can avoid common issues with managing equipment and its costs, schedule a personal demo today with our product experts: /free-demo