How do I work out my real cost per mile as an owner operator?

Your real cost per mile is your total operating costs for a period divided by the total miles you drove in that period, including empty miles. Add up everything it costs to keep the truck running and legal, then divide by every mile on the odometer. The result is the least you must earn per mile to break even. Anything above that is what is left to pay yourself.

Split your costs into fixed and variable

Fixed costs are the bills that arrive whether the wheels turn or not. Variable costs rise and fall with the miles you drive.

Fixed costs generally include:

• Truck payment or lease
• Insurance (liability, cargo, physical damage). Some policies are priced by mileage, so check yours.
• Permits, registrations and licence fees
• Trailer or equipment payments
• Accounting, load board, phone and software fees
• Parking or storage

Variable costs generally include:

• Fuel
• Tires
• Maintenance and repairs
• Tolls and scale fees
• Per-trip costs such as lumper fees, if you pay them yourself
• Fuel taxes under IFTA, which depend on how many miles you drive in each jurisdiction and how much fuel you buy

Some costs are hard to place. Repairs, for example, are unpredictable, but over a year they generally track miles. A common approach is to set aside a fixed amount per mile for repairs, based on your own history.

Don’t forget to pay yourself. If you don’t count a wage for your own labour, you will think you are doing better than you are. Taxes and retirement savings also need room in your plan, so ask a qualified professional how much to allow for.

Count every mile, including deadhead

Deadhead miles are the miles you drive empty, such as going to pick up a load or repositioning after a delivery. You burn fuel and wear the truck, but nobody pays you for them.

Use total miles, not just loaded miles. Your odometer, electronic logging records and IFTA mileage records are the best sources. Dividing costs by loaded miles gives a higher number, which shows what you need to earn on paid miles. Dividing by total miles gives the true cost of running the truck per mile driven. Track both.

Worked example

These numbers are round and made up for illustration only. Use your own.

Monthly fixed costs

• Truck payment: $2,000
• Insurance: $1,500
• Permits, fees and software: $500
• Fixed total: $4,000

Monthly variable costs

• Fuel: $5,000
• Maintenance and tires: $1,500
• Tolls and other trip costs: $500
• Variable total: $7,000

Total monthly cost: $11,000

Miles for the month

• Loaded miles: 9,000
• Deadhead miles: 1,000
• Total miles: 10,000

Cost per mile: $11,000 ÷ 10,000 = $1.10 per total mile

Now the break-even rate. Because you are paid only on loaded miles, divide the same costs by loaded miles: $11,000 ÷ 9,000 = about $1.22 per loaded mile. That is the lowest rate per paid mile that covers your costs. To include pay for yourself, say $3,000 a month, add it to costs: $14,000 ÷ 9,000 = about $1.56 per loaded mile.

Notice the gap between $1.10 and $1.22. That gap is the price of your empty miles.

Use the number

Consider accepting loads only when the rate per loaded mile is above your break-even rate, after allowing for the likely deadhead to reach the load and the likely return trip. A load that pays well but leaves you far from the next freight can cost more than it earns.

Recalculate regularly, at least every few months, because fuel, insurance and repair costs change. Keep receipts and records. This guide is general information, not tax, legal or financial advice. Ask a qualified tax professional which costs are deductible and how to report them. For current fuel tax rules and filing requirements, check IFTA and your state or DOT sources.

Common mistakes

• Dividing by loaded miles only and calling it your cost per mile.
• Leaving out your own pay.
• Forgetting costs that are paid yearly, such as permits, and not spreading them across the months.
• Using last year’s fuel or insurance figures.
• Ignoring repairs until a breakdown happens, instead of budgeting for them.
• Guessing mileage instead of using logs and odometer records.
• Treating break-even as profit. It is only the floor.