Find good rates?

My buddy told me I could get good ideas out of chatgpt on figuring out costs and what not. Would it be crazy to use that at a tool to learn or is it trash?

 

I just asked chatgpt for a good way to find out my operating costs for driving a truck. These numbers are all made up but does this look pretty accurate?

Step 1: Identify Your Fixed and Variable Costs
1. Fixed Costs (Recurring, regardless of miles driven)

• Truck Payment: Monthly loan or lease payment for your truck.
• Insurance: Includes liability, physical damage, and cargo insurance.
• Permits and Licensing: IRP, IFTA, and other regulatory costs.
• ELD (Electronic Logging Device): Subscription and equipment costs.
• Miscellaneous Fixed Costs: Accounting services, parking fees, etc.

2. Variable Costs (Depend on the miles you drive)

• Fuel: Calculate your truck's MPG (miles per gallon) and the average cost of fuel.
• Maintenance and Repairs: Include oil changes, tire replacements, and unexpected repairs.
• Tolls and Parking: Depending on your routes.
• Meals and Lodging: Expenses for staying on the road.
• Driver Salary (if applicable): If you pay yourself a salary or hire a driver.
• Other Costs: Load fees, broker fees, etc.

Step 2: Calculate Total Costs
1. Fixed Costs (Monthly)
Add all your fixed costs to get a monthly total.

2. Variable Costs (Per Mile)

• Estimate your fuel cost per mile: Fuel Cost per Mile=Fuel Price per GallonMiles per Gallon (MPG)\text{Fuel Cost per Mile} = \frac{\text{Fuel Price per Gallon}}{\text{Miles per Gallon (MPG)}}Fuel Cost per Mile=Miles per Gallon (MPG)Fuel Price per Gallon
• Add estimated maintenance, tolls, and other variable costs per mile.

3. Total Monthly Cost
Total Monthly Cost=Fixed Costs+(Variable Cost per Mile×Miles Driven per Month)\text{Total Monthly Cost} = \text{Fixed Costs} + (\text{Variable Cost per Mile} \times \text{Miles Driven per Month})Total Monthly Cost=Fixed Costs+(Variable Cost per Mile×Miles Driven per Month)
Step 3: Determine Your Break-Even Rate
Divide your total monthly cost by the total miles you expect to drive:

Break-Even Rate per Mile=Total Monthly CostMiles Driven per Month\text{Break-Even Rate per Mile} = \frac{\text{Total Monthly Cost}}{\text{Miles Driven per Month}}Break-Even Rate per Mile=Miles Driven per MonthTotal Monthly Cost
Step 4: Set a Profit Margin
To ensure profitability, add your desired profit margin to your break-even rate. For example, if your break-even rate is $1.50/mile and you want a 20% profit margin:

Rate per Mile (Profit)=Break-Even Rate per Mile×(1+Profit Margin Percentage)\text{Rate per Mile (Profit)} = \text{Break-Even Rate per Mile} \times (1 + \text{Profit Margin Percentage})Rate per Mile (Profit)=Break-Even Rate per Mile×(1+Profit Margin Percentage)
Example Calculation
Assumptions:

• Fixed Costs: $2,500/month (truck payment, insurance, permits, etc.)
• Variable Costs:
  • Fuel: $0.60/mile
  • Maintenance: $0.15/mile
  • Tolls and Miscellaneous: $0.05/mile
  • Total Variable Cost: $0.80/mile
• Miles Driven per Month: 10,000

1. Total Monthly Cost:
Total Monthly Cost=2,500+(0.80×10,000)=2,500+8,000=10,500\text{Total Monthly Cost} = 2,500 + (0.80 \times 10,000) = 2,500 + 8,000 = 10,500Total Monthly Cost=2,500+(0.80×10,000)=2,500+8,000=10,500
2. Break-Even Rate:
Break-Even Rate per Mile=10,50010,000=1.05 $/mile\text{Break-Even Rate per Mile} = \frac{10,500}{10,000} = 1.05 \, \text{\$/mile}Break-Even Rate per Mile=10,00010,500=1.05$/mile
3. Add Profit Margin (20%):
Rate per Mile (Profit)=1.05×(1+0.20)=1.26 $/mile\text{Rate per Mile (Profit)} = 1.05 \times (1 + 0.20) = 1.26 \, \text{\$/mile}Rate per Mile (Profit)=1.05×(1+0.20)=1.26$/mile
You would need to charge at least $1.26 per mile to cover your costs and make a 20% profit.

 

Thats really helpful advice! Thank you!

 

Im going to plug numbers into this chart this weekend. Just wondered if it looks somewhat right.