HOW TO CALCULATE COST PER MILE& YOUR TOTAL ANNUAL COSTS.
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Knowing your trucking cost per mile for your owner operator business is critical to your success. An owner operator must know what it costs to run their business. By knowing the costs of operating your truck, you’ll be able to turn a good profit in your business. Knowing the operating costs as an owner operator is basic information, yet critical to the health of a business.
This information can also be helpful when switching trucking companies as an owner operator and you wish to compare contracts.
Or perhaps you’re considering becoming an owner operator. These calculations will be useful in helping you make these important decisions. All owner operators should know how to determine your trucking cost per mile.
2 TYPES OF OWNER OPERATOR EXPENSES (COSTS).
1. FIXED EXPENSES
Fixed expenses or fixed costs are those which an owner operator incurs, just by owning a truck. These expenses are there whether your truck is turning a wheel or just sitting parked against the fence.
This is an example of some (Fixed Expenses).
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Truck payment
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Trailer payment
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Insurance premiums (For truck, trailer, health)
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Licensing fees
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Permit costs
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Phone bill
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Bookkeeping and accounting fees
You add all These up to get your: TOTAL ANNUAL FIXED EXPENSES.
This can then be divided by: Total Annual Miles to get your
(FIXED COST PER MILE) calculation.
TOTAL ANNUAL FIXED COSTS
Divided by TOTAL ANNUAL MILES RUN =
FIXED COST/ MILE =
YOUR FIXED COST PER MILE TELLS YOU HOW MUCH
IT COSTS YOUR BUSINESS PER MILE TO OPERATE.
2. VARIABLE EXPENSES
Variable expenses or variable costs are those which usually fluctuate according to the actual operation of your truck (and trailer).
The variable costs for some expenses like diesel, maintenance and repairs will increase directly with the number of miles covered. In other words, when your truck moves, these costs increase. Make sense?
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Diesel fuel
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Maintenance and repair costs
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Tires
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Toll fees
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Scale fees
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Truck/trailer washes
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Lumper fees
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Freight claims,
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Fines
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Fuel tax
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Heavy use tax
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Income taxes
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Legal costs
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Hotel
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Meals
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Wages (to self)
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Extra
You add all These up to get your : TOTAL VARIABLE EXPENSES
TO CALCULATE YOUR (TOTAL ANNUAL OPERATING COSTS)
FIXED COSTS + VARIABLE COSTS = (TOTAL ANNUAL OPERATING COSTS)