# When to start replacing equipment



## ajman21 (Oct 30, 2009)

I know this is could raise a wide variety of opinions but its a question worth asking. 
My truck is getting up there in miles 152,000 aprox. and the plow I run i bought used 4 seasons ago (first plow) on the cheep but well used prior to my owning it. I know both the truck and the plow and know what to expect from both. The truck is still working like a charm but I use it at or beyond what its limits are supposed to be. (have 4 med commercials and bout 35 resi accounts I handle by myself) The plow has had its problems but everything has been simple enough for me to fix and has never let me down during a storm. Its starting to act tired and is eating cylinoids. 
all that being said...
At what point do you guys say enough is enough and buy new equipment. 
I know one guy who has a large company that replaces everything as soon as the warrenty runs out and then there are those that still run stuff that looks like its from WW2. so what do you do shoot.


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## JustJeff (Sep 9, 2009)

Exactly what is a "cylinoid"???


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## Golden Boy (Mar 15, 2007)

It's a British solenoid


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## ajman21 (Oct 30, 2009)

Electronic switch that sends power to the plow when u activate the plow using the hand controller. Just like what is on a starter. I might have missspelled spelling is not my strong suit.


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## OldSchoolPSD (Oct 16, 2007)

I replace them once they are fully depreciated. Never beyond 10 years or 200,000 miles. I have one 19 year old truck but it's a toy and I keep it because I like it.


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## ajman21 (Oct 30, 2009)

to correct my previous goof; "solenoid". That's all beside the point. PSD, i see the wisdom in the depreciation. Any other opinions out there like repairs cost over a percentage of the total value of the equipment?


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## CowboysLC_DE (Aug 17, 2013)

It all depends on what you use your equipment for. 
What are you hauling in the Summer?
How many hours are you plowing each year?
How much money are you dumping into your equipment repairs?
How long of a down time for repairs?

My GMC has 206k, I plan on keeping it as a second truck or a back up truck once I get a new truck next year. I've put $3,000 into it this past year and a half since I bought it with 180k, I also knew it needed a couple grand right off the bat. I plan on buying brand new, but I could possibly see myself buying a used truck with under 80k miles.

Michael


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## BossPlowMaster (Aug 10, 2013)

theoretically the correct answer to your question... you should start replacing equipment the second you buy it... what i mean by this is that you should start to save money at the rate the piece of equipment is depreciating there for when that equipment is worn out all the way you already have the money to replace it...what i am saying is, it shouldn't matter when you replace the equipment because if you plan for it to wear out then you should be able to get the new equipment rather quickly at any point.


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## L.I.Mike (Dec 28, 2002)

I replace equipment when I can afford to. otherwise it gets repaired to plow again.


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## DQL10 (Oct 24, 2011)

sub'd. my truck is up there in miles although I never plow with it but it being a half ton it tows everyday. wondering the same opinions as well.


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## Rat_Power_78 (Sep 16, 2008)

BossPlowMaster;1752158 said:


> theoretically the correct answer to your question... you should start replacing equipment the second you buy it... what i mean by this is that you should start to save money at the rate the piece of equipment is depreciating there for when that equipment is worn out all the way you already have the money to replace it...what i am saying is, it shouldn't matter when you replace the equipment because if you plan for it to wear out then you should be able to get the new equipment rather quickly at any point.


This is 100% correct in theory. Personally I have yet to see it work in real life, especially as a relatively small company.



L.I.Mike;1752450 said:


> I replace equipment when I can afford to. otherwise it gets repaired to plow again.


This is more reality for us. Its rare that we can budget for replacements-our end of year tax situation is usually the decider for us. It is far from ideal and I do not like operating this way but it is reality for many smaller businesses in my experience.

Is this your only truck/do you depend on it for transportation (dont remember if you mentioned this)? Can you afford the payment on a new/newer truck and plow? Dont forget to factor in the increased cost of license and insurance on a newer truck. What are you spending on repairs annually?

I am getting to be in a similar spot as you. My DD work truck is just under 150k. I have owned it for several years and put roughly 50k of those miles on it myself. I personally do not want the big payment that comes with a newer truck, but repairs are starting to become more frequent and more expensive.

Downtime is a huge factor in my opinion. When this truck is down, I cant always just jump in another one and go on like nothing happened, I have to get it fixed as fast as reasonably possible. Sometimes this means paying someone else to do the repair for you rather than doing it yourself. Something to factor in to your decision.

Another thing to remember is the more miles on your current truck the harder it can be to sell it and the less money you can get for it when the time comes. Of course, using the truck to make money has value, but how may dollars per mile do you make? There will come a point of diminishing returns, you just have to find it and decide if/how far you are willing to go beyond it.


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## rjm06590 (Mar 23, 2009)

290k on my plow truck and still going great. I have the usual repairs, but nothing to not be expected. I would highly recommend not buying brand new, but maybe something with 30-50k miles. The amount of money a brand new vehicle loses in those first 30k miles is insane.


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## jasonv (Nov 2, 2012)

From a financial point of view, you should replace equipment when the (maintenance cost PLUS loss of business cost) exceeds the (replacement cost PLUS the cost of maintaining new equipment). On top of that, the new equipment may offer some other benefits, like lower (or higher...) fuel consumption, which should also be factored into the decision. But in the end, the objective of being in business is to maximize your profit, and replacing equipment needs to be considered FROM THIS point of view.

These values are easier to calculate when you're financing the new equipment, i.e., from a simplified point of view, if maintenance of the old equipment costs you $500/month and you lose $200/month worth of business, financing new equipment costs $400/month, and maintenance of new equipment costs you $100/month, then $700 > $500, its time to replace.

Now more correctly, and especially if you aren't financing, then you need to look at depreciation, time value of money, and some other related things in order to determine what the new equipment really costs you.


As far as people who replace things as soon as they run out of warranty... that is a great way to run yourself out of business.


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## DQL10 (Oct 24, 2011)

jasonv;1753079 said:


> From a financial point of view, you should replace equipment when the (maintenance cost PLUS loss of business cost) exceeds the (replacement cost PLUS the cost of maintaining new equipment). On top of that, the new equipment may offer some other benefits, like lower (or higher...) fuel consumption, which should also be factored into the decision. But in the end, the objective of being in business is to maximize your profit, and replacing equipment needs to be considered FROM THIS point of view.
> 
> These values are easier to calculate when you're financing the new equipment, i.e., from a simplified point of view, if maintenance of the old equipment costs you $500/month and you lose $200/month worth of business, financing new equipment costs $400/month, and maintenance of new equipment costs you $100/month, then $700 > $500, its time to replace.
> 
> ...


Well put. (10 characters)


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## allagashpm (Sep 29, 2012)

I agree about when maintenance and down time costs more than a payment. I was in that boat this year and while my truck hadn't let me down in a storm I was constantly worrying that it would. The best thing I did was upgrade. I still worry about it breaking down but not nearly as much, and I know its under warranty. My pyment is well worth it and when going through receipts for repairs the difference between that and a payment was not much. Down time is the biggest factor. I will keep this truck for a long time and probably use it as a back up after that.


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## leolkfrm (Mar 11, 2010)

the gsa motorpool used to use the formula...when you spend in repairs and maintenance what it cost it is time to replace it


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## ajman21 (Oct 30, 2009)

jasonv;1753079 said:


> From a financial point of view, you should replace equipment when the (maintenance cost PLUS loss of business cost) exceeds the (replacement cost PLUS the cost of maintaining new equipment). On top of that, the new equipment may offer some other benefits, like lower (or higher...) fuel consumption, which should also be factored into the decision. But in the end, the objective of being in business is to maximize your profit, and replacing equipment needs to be considered FROM THIS point of view.
> 
> These values are easier to calculate when you're financing the new equipment, i.e., from a simplified point of view, if maintenance of the old equipment costs you $500/month and you lose $200/month worth of business, financing new equipment costs $400/month, and maintenance of new equipment costs you $100/month, then $700 > $500, its time to replace.
> 
> ...


Sorry for the slow response and any typo's as im using my phone.At present repair costs for the truck are very low and the truck is paid off. I am the kind of person that replaces parts as a system so and I buy the best parts with lifetime warranty's a no brainer. But the plow, as I have been thinking bout it, is starting to cause some down time due to age but almost no cost to me but the time to repair... another thing option I have been considering is the idea of buying new to me plow and truck of a heavier capacity and keeping mine. This should allow me to bring on a secoond driver and build up a second route with out adding to my debt level much. Am I missing anything in the risks of expanding. I know that brings in workman's comp and insurance increases but got to grow sometime and seems like im at a good place to do so.


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## jasonv (Nov 2, 2012)

ajman21;1779333 said:


> Sorry for the slow response and any typo's as im using my phone.At present repair costs for the truck are very low and the truck is paid off. I am the kind of person that replaces parts as a system so and I buy the best parts with lifetime warranty's a no brainer. But the plow, as I have been thinking bout it, is starting to cause some down time due to age but almost no cost to me but the time to repair... another thing option I have been considering is the idea of buying new to me plow and truck of a heavier capacity and keeping mine. This should allow me to bring on a secoond driver and build up a second route with out adding to my debt level much. Am I missing anything in the risks of expanding. I know that brings in workman's comp and insurance increases but got to grow sometime and seems like im at a good place to do so.


I won't say that you are *missing* anything, but there are a number of plusses and minuses to doing that. The only thing you can do is try your best to think of all of them, and make the best decision you can.


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## Rat_Power_78 (Sep 16, 2008)

Hired operators generally break more parts than owner/operators do. Its true of even the good ones.


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## Italiano67 (Feb 16, 2005)

If you get another truck and run two then once again you have no backup and you haven't addressed the fact yours is getting old. Plus no one will run it as easy as you and if you put them in your new one I don't think you will care for that.


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