Trucking professionals know that it’s essential to know how much it costs to run each of their trucks. Knowing your costs per mile helps you make better decisions and plan for the future.
While some formulas will give you an idea of what it costs to operate your vehicle or truck per mile, you need to be aware of hidden costs and underlying elements. The simple formula is to add your fixed costs divided by your expected mileage to your variable costs and the actual number of miles that your truck has driven. After adding your fixed costs and your variable cost together and then divide it by the actual miles that your truck travels over the course of a year. The first place that many people go wrong is to add their fixed and variable costs together and then divide it by the number of miles that have been driven.
We explain the different costs involved in the formula:
To calculate your annual fixed costs, you need to look at all of your monthly expenses over the course of a year as well as the larger expenses that you incur. Fixed costs will include the initial purchase price of your vehicle as well as any modifications that had to be made to the vehicle (such as your company’s logo or other equipment installations). If your company financed the purchase, then your monthly interest rate should also be added to this number. Other fixed costs include your auto insurance bill, licenses, taxes and compliance certification fees. This is what it costs you to own the vehicle regardless of how many miles the vehicle does each month.
Fuel, ongoing maintenance and toll fees are the variable costs that will lead to different costs per mile each month. Maintenance, for example, can be exceptionally high one month and negligible the next month.
Your total costs will be the fixed and variable costs that you pay each month. Divide this by the total miles that your truck does each month and after a fixed accounting period, you will have a good idea of what your real on-the-road costs are.