What is Cost Per Mile?
One of the most important metrics to understand as a trucking business owner is your cost per mile. Cost per mile refers to the expenses incurred by the trucking business for every mile driven. These expenses include things like fuel costs, maintenance and repairs, insurance, equipment costs, taxes, and more.
What impacts the Cost Per Mile?
The cost per mile for a truck driver can vary widely depending on several factors, including the type of truck, the distance traveled, the type of cargo being transported, and the operating conditions. However, a general range for the cost per mile for a truck driver is between $1.50 and $2.50 per mile. Again, this number will change depending on the type of equipment, the current cost of fuel, inflation, and many more factors. For example, refrigerated equipment typically has a higher cost per mile than dry van equipment.
How do you calculate the Cost Per Mile?
Let’s break down how to calculate cost per mile in a quick example:
If a truck driver drives 100,000 total miles in a year and has total expenses of $150,000, then the cost per mile would be $1.50 ($150,000 ÷ 100,000 = $1.50).
The cost per mile calculation accounts for nearly all business expenses. If you do not have a year of mileage under your belt, do your best to estimate your targeted mileage for the year. This will give you a baseline for calculating your cost per mile. If you would rather calculate your cost per mile on a month-to-month basis, be sure to total your monthly expenses and monthly average or estimated miles to get an accurate cost per mile estimate.
Our all-in-one trucking spreadsheet includes a cost per mile calculator that automatically provides you with a cost per mile based on the expenses and miles you enter in the spreadsheet.
Why should you use the cost per mile?
It's important for truck drivers to calculate their cost per mile regularly, as it can help them determine how much they need to charge for their services in order to cover their expenses and make a profit. This information can also be useful when negotiating rates with clients or when considering new job opportunities. Any amount above your cost per mile should be business profit. For example, let’s say your cost per mile is $1.85 and this includes ALL of your business expenses. You can now feel confident that any rate per mile that you offer or are offered by a customer above that cost per mile is profitable for your business and anything below $1.85 is not profitable.
Continuing with that example, let’s say that you are offered a load that is 500 miles from pickup to delivery. You are offered by the customer $2.00 per mile to haul it and you know that your cost per mile that includes all of your expenses is $1.85 per mile. $2 - $1.85 = 15 cents per mile. You would be earning 15 cents for every mile driven as a profit. 500 miles x 15 cents per mile makes the entire trip worth $75 in business profit. You can then decide if you would like to take the load or would rather find another load that may lead to greater profits.
You can see why calculating your cost per mile is crucial to the success of your trucking business!
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Soshaul Logistics LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. It is meant to serve as a guide and information only and Soshaul Logistics, LLC does not assume responsibility for any omissions, errors, or ambiguity contained herein. Contents may not be relied upon as a substitute for the FMCSA's published regulations. You should consult your own tax, legal and accounting advisors before engaging in any transaction or operation.