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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 ExpensesFixed 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.
TOTAL ANNUAL FIXED EXPENSES = $41,030 Tallying your fixed costs will tell you what it costs to run your business. This can then be translated into a more useful piece of information in the form of a FIXED COST/MILE calculation. TOTAL ANNUAL FIXED COSTS = $41,030 TOTAL ANNUAL MILES RUN =120,000 miles FIXED COST/MILE = .341 cents/mile (Total Annual Fixed Costs divided by Total Annual Miles = COST/MILE) FIXED COST/DAY = $112.41 (Total Annual Fixed Costs divided by 365 days = COST/DAY Your fixed cost/mile tells you how much it costs your business per mile to operate. The fixed cost/day tells you how much it costs your business per day to operate, whether the truck moves or not. Related > Simple Record Keeping Tips For Truckers 2. Variable ExpensesVariable 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?
TOTAL VARIABLE EXPENSES $91,180 Related > The Biggest Mistake Owner Operators Make CALCULATING TOTAL ANNUAL OWNER OPERATOR COSTS
$41,030+ $91,180 = $132,210
$132,210 DIVIDED BY 120,000 = $1.101 PER MILE This example used total annual figures to calculate your operating trucking cost per mile. However, use the formula the same way if you wish to determine the costing for
Is Your Owner Operator Business Profitable?After looking at the trucking cost per mile and how much it costs to operate, you’ll need to answer some questions for yourself:
Related > 10 Point Checklist To Determine If You’re Ready To Be an Owner Operator Common Questions
There are a number of ways owner operators determine how much to pay themselves from their business. The driver wage has been included in the variable expense section, as I’m a believer this amount needs to fluctuate according to the health of the month in the business. It can be dangerous to have a monthly wage of $4000 when there isn’t $4000 leftover after costs to allow for this. A good rule of thumb can be around 1/3 of the gross earnings for an owner operator’s wage paid to himself.
It is possible to save money by examining your fixed costs carefully. Saving money on your phone bill is always possible, shopping for better deals for insurance premium costs, shopping for competitive interest rates on equipment loans, only spec’ing equipment which will serve your needs and not your ego. A fancy truck with a high payment can really put the squeeze on your bottom line. Get what you need for a truck (and trailer), nothing more.
Cut corners and save money where you can. With the high cost of everything nowadays, trimming back whenever possible is important. Profit margins can be tight, so pay close attention to your costs and save money where you’re able. If you are a savvy owner operator, saving money on your variable costs is always on your mind. Here are a few ways to trim costs.
Will my fuel mileage really change from month to month? There areinfluential factors which can affect your fuel mileage and thus your total fuel costs
SummaryAs an owner operator, you have a lot to think about. Knowing your operating costs and your trucking cost per mile is essential to the overall health and longevity of your business. Pay attention to it and tweak it and perfect it as time goes on. The time spent will pay you back many times over. “Remember, at the end of the day, it’s not how much money you make, but how much money you keep that counts! How much you keep, depends on how much you spend.” More Related Articles
How much do Owner operators make local?As of Oct 28, 2022, the average annual pay for a Local Owner Operator Truck Driver in the United States is $190,381 a year.
Who pays the most for owner operators?Top companies for Owner Operator Drivers in United States. Detmar Logistics. 2.8 $399,333per year. 49 reviews25 salaries reported.. Amazon DSP. 2.9 $319,750per year. ... . Bennett Family of Companies. 3.7 $300,000per year. ... . Boasso Global. 2.7 $297,439per year. ... . Atlas Van Lines. 3.8 $292,973per year. ... . Show more companies.. Do local owner operators make good money?Owner operator truck drivers make the most money compared to any other type of truck driver. A local owner-operator truck driver averages $165,722 a year compared to the average salary of a local truck driver working for a company, which is only $54,000 a year.
How do you calculate revenue per mile?What Is Revenue Passenger Mile? A revenue passenger mile (RPM) is a transportation industry metric that shows the number of miles traveled by paying passengers and is typically an airline traffic statistic. Revenue passenger miles are calculated by multiplying the number of paying passengers by the distance traveled.
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