Yes. Variable costs should be calculated by the mile.

My opinion is you are the exception to the rule. Even 20,000 miles per year difference in mileage will severely throw all your cost projections off if you are calculating fixed costs by the mile.

Example: Let's say your costs last year were $50,000 fixed and $50,000 variable (and likely, they are much higher, but I'm using this figure to keep it simple). You calculate your cost per mile at 120,000 miles, which you ran last year. It cost you $0.83 per mile to run the truck. BUT, this year, you aren't running as many miles, and are on tap to run 100,000 miles instead of 120,000. If you simply cacluated by the $0.83 per mile you ran last year, you would calculate your yearly costs as $83,000. But, in reality, your fixed costs for the year remain at $50,000, and your variable costs were really $41,667. Your cost projections are a whopping $8667 off for the year. That's a huge amount to be off on a projection, especially if you are basing your rates off that $0.83 per mile projection.

You are definately doing it a good way then, as you are calculating profit per day above and beyond your cost per mile.

My current costs run about $0.80 per mile variable, and $271 per day fixed.

 

Rev, how many working days are you basing that 271 figure off of?

 

That is every day, 365 days a year. I calculate down time into my trips. Let's say I unload a shipment on Friday, and I am offered a shipment that reloads on Monday. My per-day calculation to see if the next trip is worth hauling starts on Saturday.

Your next question will be, "Why is that per-day figure so high?" It is a valid question, and one I have been asked before. It is so high because I include every bill I have to pay into that. That includes all my personal home expenses, such as my mortgage, car payments, etc. After all, I need to know that the trips I am accepting will cover my bills - all of them. Plus, it has the added benefit of showing me how much of what I make is truly profit (money that has absolutely no destination, other than my bank account).

 

That's right........ I forgot you include everything. I remember the other thread now where you posted that info.

Money that has no destination is my favorite kind. 8)

 

Unfortunately, too many "business owners" in trucking have no clue of that concept. They figure if they cover their expenses, they have a good load. What they fail to realize is their expenses go far beyond the truck.

 

Well, my "fixed" cost, is about $10 a day! OK! If i split depreciation, it would be about $25! So, i do it by the mileage! :P

 

My expenses for everything, per day, is 395 based on 5 days a week, or 282.14 a day for 7 days. Anything after that is profit.

 

I took driving lessons last February, worked for one company for 2 months, found a good company and drove their stuff for 5 months, and bought my own truck/trailers with 0 down, 100% financed, no money in the bank just good credit. That was one year ago. I bought all my equipment brand new, top of the line, and I put myself through hell for the first 8 months to survive. I was never late on any payment and I'm at a point now where I'm making a comfortable living and my hard work has paid off so I can run at a comfortable pace.

Would I recommend it to anyone else? Not the way I did it. It was succeed or die trying, and I almost did the latter. I don't know if I could do it again.

 

Wow, tip of the old Tam 'O Shanter to ya for pulling that off!
Any tips you want to share?

 

Good job Cam for sure. Starting up in any new venture is a huge risk and I truly believe there is a ton of luck involved also.

It's like please, please please, just let me make it there without anything going wrong. I have just enough money for fuel to drop my load, pick up the next one and make it home and I know there are checks waiting for me.