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4 Min. Read

How to Calculate Cost Per Mile for a Trucking Company?

How to Calculate Cost Per Mile for a Trucking Company?

Every trucking company out there wants to increase profits. One of the best ways you can do this is by accurately calculating your cost per mile. You can then take into account different expenses to estimate an expected profit and see your spending patterns.

Making sure to accurately calculate your cost per mile is one of the most important things that you can do for your business. There is a lot that goes into running a trucking company, but identifying areas where you can cut expenses away can make a big difference. Knowing the financial side of your business allows you to keep track of operating costs.

So, how do you accurately calculate the cost per mile for your trucking company? Here are a few things to consider to help increase your profits.

Here’s What We’ll Cover:

Figure Out How Many Miles Will Get Driven

Determine Any Fixed Expenses

Determine Any Variable Expenses

Now You Can Calculate Cost Per Mile

Key Takeaways

Figure Out How Many Miles Will Get Driven

Knowing the number of miles that will get driven will set the baseline for calculating cost per mile. It depends on the type of trucking business, but to keep things simple we can use the total number of miles per month. This will include all compensated miles and not compensated miles, or deadhead.

The average mileage driven each year varies depending on the owner-operator, but most average 100,000 miles per year.

Determine Any Fixed Expenses

What fixed costs do you have or will you have month after month? These are your fixed expenses and can consist of things like monthly truck payments. Other fixed expenses can include insurance, permits or license plate renewals.

Some fixed expenses can get paid monthly and some are annual costs. For the ones that are paid yearly, simply divide the total cost by 12 to get the monthly cost.

Determine Any Variable Expenses

Your variable costs are things that can fluctuate on a daily, weekly or even monthly basis. They’re usually the costs that are associated with the miles that get driven. Things like fuel costs, for example, will vary depending on the miles that you drive over the course of the month.

The cost of fuel isn’t the only variable expense month to month, however. Other things to keep in mind are the wear and tear on tires, overall maintenance of the trucks and even a monthly cell phone plan. So, if you don’t drive any miles one week.

Now You Can Calculate Cost Per Mile

So, you have figured out the total number of miles that will get driven for a month, any fixed expenses and any variable expenses. Now you have the necessary information to calculate cost per mile. The good news is that it can be simple to calculate.

The first step is to add the fixed and variable expenses together. Next, divide the total miles that will be driven by the total of the expenses. The result is your cost per pile.

Fixed expenses + variable expenses / total number of miles = cost per mile

Now, that’s a basic overview of how to calculate cost per mile. But, you can get even more accurate by breaking down the costs even further. For example, you could determine how much you spend on each individual mile that gets driven. You can use your truck's miles per gallon and how many gallons it takes to fill the tank to calculate the cost per individual mile.

Key Takeaways

There are a ton of benefits to accurately calculating the cost per mile for your trucking company. You can see an overview of your previous month's spending patterns and identify areas for improvement. You can use cost per mile to better understand your overall operating expenses.

Knowing this information gives you the insight to make better business decisions to become profitable. You can see where money is getting spent and decide whether or not it could get maximized in another area. As well, you can identify the main areas to cut costs.

Here are a few things to remember to calculate cost per mile:

  • Gather monthly expense receipts for things like fuel, meals and hotels
  • Organize monthly bills, or fixed expenses, for things like insurance or monthly truck payments
  • Your trucks odometer readings

The first thing you need to do is determine how many miles will get driven every month. You can use past records to help estimate. Then, take into account any fixed and variable expenses. Using this information allows you to calculate the average cost per mile.

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