For drivers under authority and owner-operators, it is important to know how much your business is going to cost. Without knowing your business costs, it can be challenging to ensure your business is successful. Not only is it important to know and understand the costs, but it is important to understand how to keep these costs low.
There are many tools for owner-operators within the OOIDA Foundation’s Cost of Operation Spreadsheet that can help you.
Determine Cost Per Mile
How Many Miles You Will Drive?
To come up with the number of miles you will drive, first calculate the miles you drive each month. These miles will include both compensation and non-compensated (deadhead) miles. Below is an example of how to track your cost per mile for an average of 8,400 miles a month. While this number can be different for you, this is just an example. Most owner-operators drive about 100,000 miles per year.
Calculate Your Fixed Expenses
Your fixed expenses are the costs that do not fluctuate each month. This number will not change no matter how many miles you drive monthly. Fixed expenses can include your monthly truck payment, truck insurance, permits, and license plate expenses.
Below is an example of an owner-operator starter cost.
| Monthly Fixed Costs | |
| Truck Payments | $1,400 |
| Trailer Payments | |
| Collision Insurance | $480 |
| Deadhead Insurance | $60 |
| Cargo Insurance | |
| Health Insurance | $400 |
| Workmen’s Comp Insurance | |
| License Plates | $120 |
| Permits | $50 |
| Parking Expenses | |
| Total Amount | $2,515 |
Some of the expenses are paid yearly, and some are paid monthly. Typically, license plate expenses are paid each year. For license plates – $125 a month equals out to being $1,500 a year.
Calculate Your Variable Expenses
Your variable expenses are those that are related to every mile you drive. These expenses can go up or down, depending on the amount of driving time you have each month. An excellent example of a variable expense is fuel costs. If you do not drive as much one month, your variable expense can be lower. On the flip side, if you increase your driving miles, your fuel cost will increase as well.
Some variable expense examples include meal costs, phone charges, tires, maintenance, and fuel.
| Monthly Variable Costs | |
| Fuel | $2,000 |
| Lodging and Meals | $600 |
| Phone Charges | $100 |
| Satellite | |
| Tolls | $160 |
| Loading and Unloading Fees | |
| Tires | $300 |
| Maintenance Repairs | $450 |
| Repairs | $600 |
| Factoring Fees | |
| Broker Fees | $1,125 |
| Misc. Expenses | $450 |
| Total Amount | $5,845 |
Typically, the higher variable expenses are your fuel costs and broker fees. By lowering your fuel costs and replacing brokers with personal clients, this can lead to a lower cost per mile, and you can see your profits increase.
Calculate Your Cost per Mile
Lastly, you will need to put all the totals together from your fixed and variable expenses. To accurately calculate your cost per mile, you will need to divide your total cost by the number of miles you drive for the month.
Example: $2,515 (fixed expenses) by 8,400 (your miles) – these equal $0.30 per mile. Then you do the same thing for the variable expenses. $5,845 (variable expenses) by 8,400 (your miles) – which equals $0.70 per mile. Add $0.30 and $0.70, which is $1.00 total cost per mile.
Below are all the expenses together for a final summary.
| Financial Summary | |
| Monthly Miles | 8,400 |
| Fixed Costs Per Mile | $0.30 |
| Variable Costs Per Mile | $0.70 |
| Estimated Cost Per Mile | $1.00 |
| Monthly Variable Costs | |
| Fuel | $2,000 |
| Lodging and Meals | $600 |
| Phone Charges | $100 |
| Satellite | |
| Tolls | $160 |
| Loading and Unloading Fees | |
| Tires | $300 |
| Maintenance Repairs | $450 |
| Repairs | $600 |
| Factoring Fees | |
| Broker Fees | $1,125 |
| Misc. Expenses | $450 |
| Total Amount | $5,845 |
| Monthly Fixed Costs | |
| Truck Payments | $1,400 |
| Trailer Payments | |
| Collision Insurance | $480 |
| Deadhead Insurance | $60 |
| Cargo Insurance | |
| Health Insurance | $400 |
| Workmen’s Comp Insurance | |
| License Plates | $120 |
| Permits | $50 |
| Parking Expenses | |
| Total Amount | $2,515 |
By looking at the above information, it shows that if you drive approximately 8,400 miles a month, you get $1.00 per mile to cover your expenses. Anything over $1.00 is your business profit. What this means is if you charge $2.00 per mile, you are profiting $1.00 per mile.
Accurately Calculating your Cost per Mile
To determine if you are getting an accurate number for your cost per mile, it is advised you use accounting software. Some drivers use TruckBytes, where you can receive the necessary software at no additional charge. This is a benefit for those new owner-operators who are just beginning and are on a tight budget.