Please explain gross pay vs. cpm

As an owner operator you should calculate all your costs of operation and then use your projected mileage to develop a cost of operation in CPM (Cents Per Mile).

Then when you are looking at a load from a broker or shipper you add the freight charges, accessorial charges and FSC. Then figure the actual miles the load runs (not what the broker gives you for mileage). Then divide the total load revenue by the actual miles to find the load CPM. Compare to your cost of operation in CPM and decide if the load is worth your time.

Some don't include accessorial charges in the computation. Some try to figure FSC and fuel seperately but that just complicates the process.

 

hes not an o/o just about to start being a company driver

 

Good stuff. Yea, might want to try getting your feet wet a while as a company driver before going O/O. But then again are you sure its O/O or a leased truck from the company you work for (i.e. Prime Inc.) If your talking about leasing you pretty much started screwing yourself just for even thinking about it. If you want your own business buying your own truck is much better off than leasing to buy through a company. Leasing is a sink or swim way to O/O. A great percentage of those who do tend to sink because of companies insanly jacked up payment rates which are paid by the week instead of the same price paid per month then adding fuel cost, maint. funds, taxes, etc. It gets expensive quik.

 

You have to watch it some companies will pay 88% of 92% which means if the load pays $100 you get $80

 

And if a carrier gets hungry and cuts the rates ... 88 % of nothing is ? Both have been around for a long time and both have pros and cons !

 

You are correct but his questions were, "When a company advertises 88% of gross to owner operators, what does that mean? 88% of what?"

I wanted him to realize that you have to look at costs and revenue on a per mile basis to make a good comparison. Many already answered his percent question.

 

I would have to assume all the responses could have him even more confused....

The easiest approach....concentrate on learning the initial concept of being a rookie and learning all the basics first. During this time, many of your questions will get answered just in casual conversation with other drivers.

As to the ramifications of gross/net/CPM...get yourself qualified to be a safe, efficient driver first...then progress into the more detailed arena of L/O or O/O. Too many rookies have these distant dreams...take it one step at a time!

 

Would you believe they are of me? NO? Well they call me Otter!

No worries...nobody here will hold that against you!

There you go girl...git er done!

 

Be very carefull working for a company that has O/O's on a percentage plan as well as company trucks paying drivers by the mile. Most people dont stop to think about the conflict here, and the potential for abuse if very high, expecially in this cut throat enviornment.

In this situation, the lower paying loads ( revenue per dispatched mile ) are typically given to the leased O/O's, as they are paid on a percentage. The higher paying loads are often placed on the company trucks where the driver is paid a fixed cost per mile. Its just another way for the company to maximize its profits. There is no guaranteed way to verify or prove this, unless you have someone on the inside that is in charge of assigning loads. Its one of those unwritten rules that supposidly dont exist.

Even though a O/O may see the " so called " invoice for shipping charges, that sheet may not reveal the whole deal that may have been worked out between the companies owner / broker and the customer. I would not be surprised if many of these companies are receiving holdbacks, whereas, they are getting "so called" private bonuses and the end of a month or fiscal quarter.

There is no language or law that prohibits a company from accepting a bonus or extra pay from a customer for meeting a certain goal.