Calculate Your Cost Per Mile to Maximize Profits
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Fact-checked by: Bruce Sayer
In the trucking industry, we know that profits are everything, and it’s essential to know your truck operating costs for every load. As a trucking company owner, ensuring 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 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 without the proper tools. The eCapital Trucking Cost Per Mile Calculator app takes the guesswork out of it and walks you through the steps to find your cost per mile.
Regular use of a trucking cost per mile calculator app allows you to quickly and easily estimate your expected profits for every haul. It could be devastating for your trucking business if you miscalculate your costs and don’t charge your shippers and brokers enough. Knowing your monthly cost per mile could mean the difference between success and failure. So, let’s jump in.
How to Use a Trucking Cost per Mile Calculator app
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 expenses such as insurance, truck and trailer payments, mobile phone plan, ELD and health insurance premiums. These are your fixed truck operating costs.
The online eCapital Trucking Cost Per Mile Calculator app shows the typical fixed costs with the national average numbers included as an example for a startup owner operator. Most fixed expenses are straightforward 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 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.
Keep receipts and records of variable costs to assist with tax preparation and to input accurate costing details when using a trucking cost per mile calculator app.
3. Total Miles You Drove
The most critical number to populate the trucking cost per mile calculator app 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 Trucking Cost Per Mile Calculator app assumes that the average trucker drives around 14,000 miles per month. 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 Trucking Cost Per Mile Calculator app can determine your profit per mile and profit for the month by including your monthly accounts receivable. Just add up all your invoices and enter them in the revenue section.
Increase Your Trucking Business Profits
After you complete the calculation, use the eCapital Trucking Cost Per Mile Calculator app 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 decreases 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 load boards, leads to higher profits. You have some control over those costs, which can substantially impact on your bottom line.
Ditch the expensive or competitive loads board and connect with eCapital’s free broker network to access 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!
Key Takeaways
- One of the most important things you can do before you start negotiating your rate per mile with shippers and brokers is to calculate your cost per mile (CPM).
- Regular use of a trucking cost per mile calculator app allows you to quickly and easily estimate your expected profits for every haul.
- After you complete the calculation, use the eCapital Trucking Cost Per Mile Calculator app to play with the numbers and see how you can maximize your profits.
ABOUT eCapital
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.
eCapital Corp
eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.