Cost-Per-Mile Calculator

The “Good” Method: A Simple Way to Calculate Your Trucking Cost-Per-Mile

Let’s start with the simplest way to calculate your cost-per-mile. This method gives you a general idea of your operating costs and is a great starting point for understanding your business’s financial health.

How it works:

1. Gather your financial data:You’ll need your profit and loss (P&L) statement, which summarizes your income and expenses over a specific period. If you don’t have a P&L statement (you really should!), simply add up all your trucking expenses for a given period.
2. Calculate total miles:Determine the total number of miles you drove during the same period.
3. Divide and conquer:Divide your total expenses by your total miles driven. This gives you your cost-per-mile.

Example:

Let’s say your total expenses for the last quarter were $47,655.54, and you drove 29,417 miles.

Your cost-per-mile would be: $47,655.54 / 29,417 miles = $1.62 per mile

Important Note: While this method provides a quick estimate, it’s not the most accurate. Here’s why:

• Reimbursed expenses:Some expenses, like lumper fees, are reimbursed, meaning they don’t represent a true cost to your business.
• Incomplete accounting:Certain expenses, such as truck payments, might not be fully reflected on your P&L statement.

Despite its limitations, this simple calculation offers a valuable starting point for understanding your cost-per-mile and can help you make more informed decisions about your trucking business.

The “Better” Cost-Per-Mile Method: Level Up Your Trucking Finances

While the “good” method provides a basic understanding of your cost-per-mile, a more detailed approach gives you a clearer picture of your expenses and helps you identify areas for improvement. This “better” method involves breaking down your costs into individual categories.

Here’s how it works:

1. Itemize your expenses:Instead of lumping all your expenses together, list each one separately. This includes everything from driver pay and fuel to insurance, truck payments, and maintenance.
2. Calculate cost-per-mile for each category:Divide each expense by your total miles driven to determine its cost-per-mile contribution.

Example:

Let’s break down the costs for a hypothetical trucking business, “Road Runner Transport,” over a three-month period:

Key Considerations:

• Time period: These figures represent three-month totals. It’s essential to analyze data over consistent periods for accurate comparisons.
• Profit and Loss Statement: Most expenses come from your P&L statement. 
• However, some require adjustments: 
• * Truck and trailer payments: Only the interest portion appears on the P&L. Use the actual payment amounts for a more accurate cost calculation. 
• * IRP (International Registration Plan): If you didn’t make a payment during the analyzed period, estimate based on your annual IRP costs.
• Categorization: Group similar expenses together (e.g., “Subscriptions” includes cell phone, pre-pass, and QuickBooks).
• Startup costs: Exclude startup costs from your calculations unless you’re paying off a loan related to those costs.

By analyzing your costs in greater detail, you gain valuable insights into your trucking operation’s financial performance and can make more informed decisions to improve efficiency and profitability.

The “Best” Cost-Per-Mile Method: Mastering Your Trucking Costs

To truly optimize your trucking business and make data-driven decisions, you need to go beyond simple cost calculations. The “best” method involves understanding the difference between fixed and variable costs and how they impact your overall profitability.

Fixed vs. Variable Costs:

• Fixed Costs:These expenses remain relatively constant regardless of how much you drive. Examples include truck payments, insurance premiums, permits, and some administrative costs.
• Variable Costs:These expenses fluctuate based on your mileage. Fuel consumption, driver pay, maintenance, and tolls are prime examples.

Why is this distinction important?

By separating fixed and variable costs, you can:

• Identify cost drivers:Pinpoint which expenses have the greatest impact on your bottom line.
• Optimize spending:Develop strategies to reduce both fixed and variable costs.
• Make informed pricing decisions:Set rates that accurately reflect your costs and ensure profitability.
• Analyze profitability on different routes:Understand how different routes and loads affect your overall costs.