Calculate the custom rate per acre for farm operations by combining machine cost and operator labor per acre. Set fair rates for custom hire work.
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. Whether you are a beginner or experienced professional, this free online tool provides instant, reliable results without manual computation. By automating the calculation, you save time and reduce the risk of costly errors in your planning and decision-making process.
Whether you hire custom work or provide it, knowing the cost-based custom rate ensures fair pricing. Hiring below-cost means the custom operator is subsidizing your operation. Charging below cost means you're losing money on every acre served. Having a precise figure at your fingertips empowers better planning and more confident decisions.
$/ac = Machine Cost/hr ÷ Acres/hr + Operator Labor/hr ÷ Acres/hr
Result: $17.92/ac custom rate
Machine cost per acre = $185 / 12 = $15.42/ac. Labor per acre = $30 / 12 = $2.50/ac. Custom rate = $15.42 + $2.50 = $17.92/ac.
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.
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 rates have increased steadily due to rising equipment costs, fuel prices, and labor rates. The 2020s have seen particularly sharp increases. Staying current with rate surveys and your own cost data ensures your pricing remains competitive and profitable.
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.
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.
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.
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.
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.
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.