Calculating your cost per mile is something that seems difficult at first but is actually pretty simple, if occasionally tedious. It is something that you should be doing regularly though, because it keeps you informed about how your business is performing, and optimally, it’s probably something you want to track on a month-to-month basis.
To start you will need:
1. All your expense receipts for the month (Including fuel purchases, food, etc.)
2. All of your bills (including insurance, truck payment, health insurance, etc.)
3. Your odometer reading from the beginning and end of the month.
The formula for cost per mile is simply this:
Total Expenses ÷ Total Miles = Cost Per Mile
For Total Expenses, you need to add up all of your expense receipts and bills for the month to get a grand total. If you’re the type that prefers to do this by hand, a spreadsheet can make this easier since it can help you see if you’ve missed something so you don’t have to keep starting over like you might with a calculator. If you prefer an easier method, many trucking software programs will do this for you automatically.
Then you need your Total Miles. This is very simple, subtract your odometer readings:
Odometer from end of month - Odometer from beginning of month = Total Miles
Now you just divide the two numbers to get your cost per mile.
If you have multiple trucks you will want to calculate your CPM for each truck and overall. When you calculate overall, do it like this:
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.)
Then do the same calculation as before.
For example, let’s say you have just one truck, or are just calculating your CPM for just one of your trucks, and this past month, you’ve spent $3000 in fuel, $150 in tolls, $75 in supplies for the truck, your truck payment is at $1000, $200 for food, $800 for insurance, and $110 for your cell phone. Realistically, we know there will be more expenses than this, but this will get us started. Then you check your odometer readings for the beginning and end of the month: 356,566 at the beginning, and 358,432 at the end.
$3000 + $150 +$75 + $1000 + $200 + $800 + $110 = $5,335 in Total Expenses
361,432 – 356,566 = 4,866 Total Miles
Just plug these two numbers into the formula:
$5,335 ÷ 4,866 miles = $1.09
So in this example, you’ve spent $1.09 for every mile you drove this month.
You have multiple trucks? Do the above calculations for every truck first, then use the same formula to get a fleet figure.
Truck 1 expenses came to $5,335, and the miles for the month came to 4,886.
Truck 2 came in at $4,438 with a total of 5,193 miles
Truck 3 was $6,109, and 5,532 miles
Total Expenses for all 3: $5,335 + $4,438 + $6,109 = $15,882
Total Miles for all 3: 4,886 + 5,193 + 5,532 = 15,611 miles
Cost Per Mile: $15,882 ÷ 15,611 miles = $1.02 spent for every mile traveled, collectively.
You see? It's pretty simple after you see it done.
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More resources for trucking business owners:
- What’s the difference between HVUT, Form 2290, and IFTA?
- "How long do I have to keep these?": FMCSA record retention for owner-operators and small fleet owners
- Top tax filing tips for owner-operators
- Tips for owner-operators with tax problems
- How are fuel surcharges calculated?
- Simple rules for maintaining long-term profitability in your trucking business
- Starting out with an owner-operator trucking business
- Owner-operator expenses: Fixed costs vs variable costs
- Understanding owner-operator expenses and costs
- Gaining half an MPG can put more money in your pocket than adding $90,000 in revenue
- Cutting fuel costs and improving fuel efficiency for Owner Operators
- Top truck-buying tips for owner-operators
- New versus used truck pros and cons table
- Buying a truck: Should you get a new or used rig?
- Preventative maintenance strategies to avoid major repair costs
- IFTA fuel-buying strategies: Where is the best place to buy fuel?
- Calculating your cost per mile
- Owner Operator Expenses - Fixed Costs vs Variable Costs
- How do I calculate IFTA?
- How does IFTA work?
- How did IFTA start?
- What exactly is IFTA?
- Tracking miles for IFTA
- Fitness for the road
- Acronym cheatsheet for the trucking industry