To earn a profitable living as a trucker, you need to minimize trucking expenses while maximizing revenue. Your profit in this industry is the amount of money you keep after paying all trucking expenses. However, your profit is not your net income. That is because the Internal Revenue Service (IRS) allows you to write off business expenses while taxing you only on the profit.
Knowing your trucking cost by mile is the first step in understanding your trucking expenses so you can determine your profit. We outline how to calculate your cost per mile below.
Estimate How Many Miles You Drive Per Month
You can start the process by reviewing your driver logs and adding up your average miles driven per month. Although the number will vary for every trucker, it’s safe to assume you cover a lot of mileage every week, month, and year. According to a 2018 report posted by Business Insider, the typical long-haul trucker drives 100,000 miles a year or approximately 8,333 miles per month. Be sure to include both compensated and non-compensated mileage in your calculations.
Make a List of Your Fixed and Variable Expenses
A fixed expense is one that remains the same from one month to the next whether you drive few miles or many. Common examples of fixed trucking expenses include:
- Health insurance
- License plates
- Licenses and permits
- Trucking insurance
- Workers’ compensation insurance
Some fixed trucking expenses occur yearly rather than monthly. You will need to divide the total annual payment by 12 to come up with a monthly cost.
Variable trucking expenses are those that change based on the number of miles you drive each month. Trucking expenses that fall into the variable category include:
- Loading and unloading fees
- Maintenance and repairs
- Parking expenses
- Toll roads
Don’t forget to leave a category for miscellaneous trucking expenses that won’t fit into any other category.
Use the Above Information to Figure Trucking cost by the mile
After adding the totals from both fixed and variable trucking expenses, divide the number from each column by the number of miles driven each month. Using the average 8,333 miles per month and a fixed expense amount of $2,500, you would have a trucking cost by mile of 30 cents. Repeat this process with the variable expenses column and then add the two figures together. This is your trucking cost by mile. To determine your profit, subtract your trucking cost by mile from the amount you earn per mile.
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