As anyone operating a delivery business knows, it’s a tough game. To win business, your pricing has to be competitive, and there always seems to be that one competitor who’s ready to low-ball a bid to undercut you. But to stay in business and make a living, you have to charge more than each job costs you to do.
That means two things. First, you have to know what your trucking costs per mile are. And second, if you want to win business by being among the low bidders but still be successful in the long run, you need to manage your costs to keep them as low as possible without going broke.
One of thing every delivery business needs is a trucking cost per mile calculator. One that's easy to get your hands on, always available, and easy to use — while also being thorough. Ultimately, you'll want the spreadsheet to be able to calculate your revenue per mile as well.
Well, that’s what we’re providing below in Excel/spreadsheet format.
To make the calculator spreadsheet work, you’re going to have to do a little homework and have some figures handy. But get that out of the way and follow our instructions, and you’ll be able to determine what your cost bogey is and to figure out your profit or loss.
The benefit is twofold. You’ll know what to charge to keep you in business, or, if your number isn’t competitive or where you want it, you have a tool to help you target where you can cut fleet expenses, short- or long-term.
How do you calculate trucking cost per mile?
As you’ll see, our calculator is a spreadsheet that asks you to enter two different kinds of expenses: fixed and variable.
Fixed expenses are those that don’t change much from month to month or year to year. They’re the kind you’re going to have to pay whether you’re on the road or not. These are things like bank payments for your equipment, insurance premiums, permits, accounting fees, and property leases.
Variable expenses, on the other hand, are those you rack up by driving – the more you drive, the more they come to. These include costs for driver pay, fuel, tires, preventive maintenance, repairs, tolls, road taxes and the like. Not only do these add up the more your company is on the road, they can also change by season, by the month, or even by the week, so it pays to stay on top of them to keep your competitiveness and profitability in line with market conditions.
What about profit?
This takes a little homework, too, but the process is simple. Just keep track of or estimate your mileage for a month (or any period of time) and divide your total sales revenue by your mileage for that same period of time. (If you’re not working at full capacity, estimate both your mileage and revenue as if you were.)
If your trucking cost per mile isn’t more than the rate you charge, congratulations! At least you’re not losing money and on a path to going out of business. But you’re not thriving, either. Business exists to make a profit, and it’s not just a luxury. You need to make a profit for several reasons, and our cost per mile calculator helps you determine whether you’re doing more than just breaking even and what your rate of profit is.
A major reason is that you’re going to have to replace your equipment someday, and it’s a good idea to have a source of funds to do that. Another is to create a rainy-day fund, money to keep you in business when business is slow.
Finally, you might want to build a war chest to expand your business, either by adding equipment or acquiring a nearby competitor or one in new territory.
Using the trucking cost per mile spreadsheet
Start by entering your total annual mileage — actual or estimated — for all the vehicles in your fleet (even if it’s only one). Then enter your total monthly fixed and variable expenses (sometimes the spreadsheet asks for annual figures — be careful to follow the notes). In the profit and loss section, enter your average rate per mile. Our spreadsheet calculator will take care of the rest, showing both your annual and monthly cost per mile and what your profit or loss is.
Once you know those figures, you can modify any number you entered to find out what it would take to improve your profitability.
I hope this article helps you understand how you might go about tracking your cost per mile. Click on the link below to download our free ‘Trucking Cost Per Mile and Profit Calculator’.👇