It won’t take much time in the trucking industry for you to learn that knowing your cost per mile is a pretty big deal. Running a trucking business without that information is a guarantee that you won’t have a trucking business for very long.
Learn the basics of calculating your rate per mile, and why it’s essential to a successful and long-term run as a truck driver.
Why Rate Per Mile Matters
Knowing your rate per mile allows you to estimate how much you will make. If you’re a new owner-operator, then you understand how significant profit is. Having a clear idea of how much you’ll keep after expenses each month is vital to keeping your business afloat.
But there is a lot that goes into calculating your rate per mile. Let’s look at what some of the basics of your RPM. Keep in mind that not everyone’s RPM will be exactly the same. The size of your operation and expenses will determine your minimum RPM.
IMPORTANT: Make sure you speak to a financial professional when it comes to your business finances.
How to Find Your Rate Per Mile
To figure this number out, you’re going to need a few things:
- All of your expense receipts for the month (fuel purchases, food, etc.)
- All of your bills (insurance, truck payment, health insurance, etc.)
- Your odometer reading from the beginning and end of the month.
Once you have all of your information in order, it’s pretty easy. Simply follow this formula:
Total Expenses ÷ Total Miles = Cost Per Mile
Keep in mind that this is just for one truck. If you have multiple, you will need to calculate your CPM (cost per mile) for each truck and then overall. Here’s what that will look like:
Total Expenses = (Total Expenses for Truck 1 + Total Expenses for Truck 2, etc.)
Total Miles = (Total Miles for Truck 1 +] Total Miles for Truck 2, etc.) and then plug those numbers into the original equation above.
If you stay organized and regularly check in on your numbers, you can save your trucking business from any unwanted surprises and ensure the health of your business.
Also, it’s important not to reinvent the wheel. There are many resources for truckers that can help you get started with your RPMs.
It’s always easier to stay on top of important tasks like your cost per mile when you’re organized. Get in the habit of saving receipts, keeping digital copies, and you might even want to maintain dedicated filing area and system to keep everything in order. We also recommend using a spreadsheet to keep track of expenses. You can find tons of free templates online and when you choose one that works for your business you can upload to the cloud so you can collaborate with other team members or access your information from anywhere.
We hope this information was helpful. If you’re interested in checking out more resources exclusively for truck drivers, take a look at our blog. Or learn more about FreeFreightSearch.com’s membership and how you can get access to the world’s largest FREE load board!