Calculate Your Cost Per Mile to Maximize Profits
In the trucking industry, we know that profits are everything and it’s important to know your truck operating costs for every load. As an owner of a trucking company, making sure you exceed your break-even point is crucial to staying on the road. One of the most important things you can do before you start negotiating your rate per mile with shippers and brokers is to calculate out your cost per mile (CPM).
Figuring out your CPM isn’t something that can be calculated in your head. And while it’s not extremely difficult, it can be hard to do without the proper tools. The eCapital Trucking Cost Per Mile Calculator takes the guesswork out of it and walks you through the steps to find your cost per mile.
Knowing the costs of operating your trucking business allows you to estimate your expected profits for every haul. If you miscalculate your costs and don’t charge your shippers and brokers enough, it could be devastating for your trucking business. Knowing you monthly cost per mile could mean the difference between success and failure. So let’s jump in.
How to Calculate Your Trucking Cost Per Mile
1. Know Your Fixed Trucking Operating Costs
Fixed costs are the expenses that are the same from month to month, regardless of whether your trucks are hauling a load or sitting in the parking lot. Fixed costs include things like insurance, truck and trailer payments, mobile phone plan, ELD and health insurance premiums. These are your fixed truck operating costs.
The online eCapital Cost Per Mile Calculator shows the typical fixed costs with the national average numbers included as an example for a startup owner operator. Most fixed expenses are straightforward and easy to calculate. Some costs are paid yearly, rather than monthly, and are indicated in the calculator.
2. Identify Your Variable Costs
Variable costs can increase or decrease based on the number of miles you drive each month. So, the more you drive, the higher your variable costs.
For example, fuel is a variable expense. Some months you drive more or less than others and your fuel costs reflect that. Other variable operator expenses include meals, lodging, tolls, tires, truck maintenance and repairs.
3. Total Miles You Drove
The most important number in the cost per mile formula is the total number of miles that you will drive in a given month. This number of miles includes compensated miles and deadhead (not compensated) miles.
The online eCapital Cost Per Mile Calculator assumes that the average trucker drives around 14,000 miles per month. Obviously, this mileage varies by owner operator and can be changed to reflect your actual or anticipated mileage. However, most owner operators report driving around 100,000 miles a year.
4. Calculate Total Revenue & Profit Per Mile
In addition to finding out your CPM, the eCapital Cost Per Mile Calculator can determine your profit per mile and profit for the month by including your monthly accounts receivable. Just add up all of your invoices and enter them in the revenue section.
Increase Your Trucking Business Profits
After you complete the calculation, use the eCapital Cost Per Mile Calculator to play with the numbers and see how you can maximize your profits. More miles driven can mean more profits, for the most part. Your fixed costs don’t change so your CPM goes down as you drive more. However, your variable costs will go up as your miles increase.
For most drivers, cutting variable costs, including saving money on fuel and not relying on expensive load boards, leads to higher profits. You have some control over those costs, which can have a substantial impact on your bottom line.
Ditch the expensive or competitive loads board and connect with eCapital’s free broker network for access to high-paying, credit approved, factorable loads. Bring down your CPM further by using fuel discount cards. With the eCapital fuel card you can save thousands per year, per truck directly at the pump.
Driving more, taking on higher paying loads, cutting down fuel costs and stopping the reliance on expensive load boards can add up to a lower cost per mile and bigger profits.
It’s a tough job on the road and we want to make sure you know your costs so you can grow your profits. Happy driving!
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