Trucking Insurance Costs

Trucking companies mostly fall into the debate of determining the profits as they usually face the challenge of seeing the number behind and keeping track of everything that goes into determining the cost. Therefore, the concept to calculate cost per mile trucking takes the show. This is an ideal method to manage profits and ensure your business’s financial stability. After taking into account different expenses, it’s possible to estimate a profit and see how much you’re spending.

It is crucial for your business to calculate cost per mile accurately. Trucking companies can have high expenses, but cutting expenses where possible makes a big difference.

The question is, how to calculate cost per mile? Keep reading the blog to discover everything about calculating cost per mile.

What Is the Cost Per Mile?

A cost per mile involves more than just calculating gas costs; it is certainly an important consideration. The total expenses you incur per month, quarter, or year divided by the total miles you drive. Based on that, you can figure out the cost per mile.

To calculate the Cost of Running a Truck Per Mile, drivers must keep track of all business expenses, such as food and lodging receipts, truck permits, and insurance.

Cost Per Mile Formula

Calculating cost per mile is relatively straightforward. To figure out your total expenses, divide your total mileage by the total costs:

Cost Per Mile = Total Expenses / Total Mileage

Although this cost per mile calculation formula is very straightforward, it’s important to keep detailed records and perform calculations adequately to determine the break-even point.

Read More: The Premier Trucking Insurance Companies in the USA

How to Calculate Cost Per Mile?

The cost per mile can be used to determine the financial health of your company. When calculating your cost-per-mile, ensure your data is accurate to avoid errors. Here are top ways that clearly highlights how to calculate cost per mile trucking:

1. Decide on a timeframe

The first step is to determine a time frame for your calculation. Choosing a shorter timeframe for your first cost-per-mile calculation will make things easier since you’ll need to collect less data and consider fewer figures.

Calculate your cost per mile over a shorter period, then choose a longer interval that fits your company’s operating principles and more closely matches your other metrics. Depending on your business, you might track your sales monthly, quarterly, or semiannually.

2. Add up your miles

During the selected period, you will receive daily mileage reports. Internet Revenue Service lets you track your mileage for reimbursement purposes and stay on top of finances. If you are not tracking your mileage, it is time now to take a chance to calculate the mileage either using the online tool or manually via odometer and a physical log.

Let’s understand with an example: suppose your odometer is showing readings of 70,000 miles at the start of the month. Whereas the ending month reads 82,000 miles, you drove 12,000 miles during the month.

3. Keep track of your costs

Maintain a cost tracking log during the same period as you kept a mileage log. Make a list of all of your expenses during this period, including:

• Rent

• Salaries

• Truck payment

• Bank fees, etc

Take the total of these expenses and add them up. Listed and added up your variable costs are:

• Fuel

• Taxes

• Tolls

• Meals, etc.

Make a total cost estimation by adding together your variable and fixed costs.

4. Calculate your salary costs

Whatever size your operation is, you’ll have to pay a salary and pay employment costs. Here are some salary costs you might have to add up:

• Wages

• Taxes

• Benefits

• Payroll fees

The salary expense would be $3,500 per month if you did not have employees.

5. Calculate costs based on mileage

When you stay on top of your expenses and mileage, you can conveniently calculate average cost per mile for trucking. To get the right estimate, divide your total cost per mile by the total miles driven.

For example, the driver of ABC company drives 400,000 miles in a given year and has put an investment of upto $8,000,000 in a given year on travel costs, which values the cost per mile to be $20.00. However, an average 300-mile trip costs around $6,000.

Besides monthly driving miles and overhead costs, it is recommended to take into account diesel price per gallon, the miles per gallon of your truck, and the salary per mile of your driver.

Tips to Reduce Cost Per Mile

To maintain a profitable trucking business, reducing costs per mile is crucial. Here are some helpful tips to Reduce Cost Per Mile:

• Route optimization

• Make pre-and post-trip inspections a priority

• Reduced food costs

• Save fuel by reducing consumption

Read More: Tips and Strategies for Surviving in The Trucking Market

Conclusion

Calculating cost per mile is an important metric to track to get insights into your trucking business’s financial performance. Truck operators and business owners can use cost-per-mile calculations to analyze their business’ health. Using cost-per-mile calculators can give you essential insight into your cost-effectiveness, which routes to take, and other ways to maximize your profits.

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