Cost Per Mile

[arkjarhead]

I want to throw a hypothetical question out there. If I've always been a "company driver" that has never paid for anything besides my personal expenses(food,beverages,etc.) on the road what is the best method of researching what my possible cost per mile would be when I decide to take the leap into becoming an owner operator? I mean I know I'll have a truck payment,fuel, preventive maintence, tolls, truck washes, insurance, base plates, and irp. I also know somethings differ based on which company one chooses to lease on with. Like qc fees. So how do I go from a blank peice of paper or spreadsheet to one with actual working numbers on it?

 

[Turtle]

Find out what the fixed costs are first, like truck payment, insurance, plates, QC etc. Then, out of thin air try to yank out how many total miles you think you might drive in a year (miles on the odometer, paid and deadhead). Divide that by the MPG the truck gets to get an approximation of how many gallons of fuel you'll burn in a year, then multiply that times a rough ballpark cost per gallon to get fuel costs.

How many miles can you run on tires? Use a how much you'll spend in a year on them. Maintenance is a tough one, as it depends on the age of the truck, how well maintained it's been in the past, lots of things. Plug in a figure, good luck.

Once you have working figures in there, they will need to be adjusted as time goes on.

 

[arkjarhead]

It's been a long time since I've had to get a comcheck for an oil change on a truck. What is the price of that running these days for a class 8? When it comes to miles would it be best to take the number the recruiter offers for the paid miles and then subtract about 10%, and then figure a % based off of that to be dh miles? I know how to drive a truck. I would like to know more about the business side of things. Thanks for the advice turtle.

 

[LDB]

What you (as in anyone/everyone reading this and considering this) should be doing is while driving as a "company driver" take detailed and copious notes as you go along. After several months of this you'd be able to put together a very good estimation of expenses.

 

[JohnO]

Using info Leo suggested add input into OOIDA CPM worksheet and you'll have a good idea of your costs.

With this worksheet you can include a slew of what if scenario’s very easily.

Cost Per Mile Worksheet

During the year I drove for 2 owners one of the things I did was tinker with these numbers until I came up with a formula that would suit my needs. Once I was satisfied I began search for my first truck and carrier.

When I narrowed list of carriers down I spoke with recruiters asking if they would pass on my number to a few current solo drivers living on east coast, who would be willing to answer a slew of rookie questions. Only TranStewart refused my request stating they were concerned I may be trying to recruit their drivers, so I removed them off my list.

After talking with many current drivers from different carriers I narrowed my list again to C&M and Landstar. After some more investigating I chose Landstar and have been pleased with my decision.

When deciding on buying my first truck it was a no-brainer that it was going to be a used older model. When speaking with owners I would ask for numbers of current or previous drivers of the truck and ask them their thoughts on truck. After several months of searching and talking with countless number of owners I chose one and have been quite pleased with decision.

All this searching for carrier and truck was a direct result of taking the suggestions passed on by EO members. Readings almost a year of past posts was invaluable and boring at times but it gave me the information I needed.

 

[nightcreacher]

Ark,going from company driver to owner opp can be a scary thing,but its not rocket science.To put thing simple,you have FIXED costs and VARIABLE costs.First lets talk the Fixed costs.These are the costs that remain constant,every month,if you drive 1 mile or a million miles,and therefore the more miles you drive,the less they costs per mile.Truck payment,is a cost but not a right off,the depreciation of the truck is,and the interest on the note.If you take a 5 year depreciation,this will usually work out to the same as your truck payment.OK,enough of that,this will get you confused.Another constant expense is your truck insurance,liscense plates,accounting fees,qc payment,pre-pass payment.If you pay to park your truck at home,and its the same cost every month,a fixed expense.If you buy a computer for business,run your internet on cable,or even pay for your internet,this is an expense,and fixed.You can see what fixed costs are,those costs that are the same every month,miles you run have no bearing on changing that cost,but when figuring costs per mile,the more miles you run,less the fixed costs will be,but on the other hand,run fewer miles,then cpm will be more.
Now lets talk variable costs,cost that are effected by the miles you run.Tires,engine overhaul,fuel costs,services,preventive maintanence.Tolls,truck washes,arent an everyday expense,but are still considered a variable,'cause the expense isn't constant every month.
My variable costs I pay thru my Tcheck advances,my fixed costs come out of the money I send home.This is what works for me.
Before I became an owner opperator,while I was driving a company truck,and my First job was as a union driver,so I had a great pay fom the start.My pay was 29% of the gross tariff,and the truck I was driving made $1.20 per mile,for all miles.My pay was actually about 11 cents higher per mile than union scale,but we were permitted to pick and choose our loads.Now before I decided to be an owner opp, I drove company truck for 4 years,Ifigured all the expenses I paid on the company truck,then estimated what my fixed cost would be,and after I subtracted these costs,I would seeif I had enough money to pay my household bills,been owner opp ever since.I lost my first two trucks,didnt figure in for deregulation,my loads kept getting cheaper,but my costs didnt.In 1984 I found expediting,and my finance did a 100% turn around.