Fuel for Thought

Cost Per Mile

Cost per mile (CPM) is the soul of any driving operation. CPM is a simple pocket gauge to compare expenses to miles driven. With CPM in hand, an owner will always know if they are making enough money to cover their expenses to operate. The number is easy to calculate, and at tax time all the numbers that go into filing taxes are in one place which makes finding the CPM that much easier.

CPM is really just two numbers—one number divided by the other. Total cost of everything spent during the year divided by total miles equals cost per mile or $/mile. All my expenses for 2014 were $27799, and all miles were 74351 miles. Those numbers would divide into each other for a CPM of $.37/mile ($27799 ÷ 74351 miles = $.37/mile). That means it cost me 37 cents for every mile I drove. But since every mile driven isn’t contributing to my pay, I have to compare my expenses to my productive miles. When I take my total expenses and divide by my dispatched miles ($27799 ÷ 57033 miles = $.49/mile), it shows that I need to make $.49 per dispatched mile to cover all the dispatched and roaming miles during the year. The above numbers do not include vehicle loan payments, because my van is payed off. A three year loan for a fancy new van will generate an additional $14,440 in expenses annually. The van payment would be equivalent to an extra $.24/mile on top of the $.49/mile. And after paying off the current vehicle, the continued setting asside of $.24/mile goes towards the replacement vehicle. Of course, your numbers will vary. Last year was a high repair year for me, but it shows how high costs can get.

Someone planning to drive will not have a history of numbers to work with, but it is still a critical exercise to run before even buying a vehicle. Researching and estimating the projected numbers creates a picture that will resemble a business plan.

eb