Driver profit split question

BigGee · Feb 1, 2016

Just pay the driver cpm and call it a day.

rank · Feb 1, 2016

I agree with Brian, i.e. you need to establish some basics.

You need to decide how much profit you need to make in order to make it worth YOUR risk and YOUR time and YOUR capital.

What is that number?

From there you can estimate your earnings and from there you can decide on equipment and driver compensation.

So what is your magic number?

RERM · Feb 1, 2016

What are you gonna haul??? OTR, Regional or local??? Dedicated contracts or broker freight???? How much return on your investment are you looking for????

TransportQueen · Feb 2, 2016

brian991219 said: ↑

As an employee the driver should not take the risk of having a bad week where their share of the 50/50 profit split would be low, rather they should be paid a fair wage to compensate them for everything they do. You have a bad week with a breakdown that is not the drivers fault, they should still earn an average weeks pay. I haul cars, as a company we are typically paid by the unit and pay our drivers a percentage of the load, but we also have two drivers on weekly salary since they would not make a good living on commission doing short haul local work.

First, you need to figure out within your business plan what you can afford for labor, typically labor costs are the second or third highest expense in operating a trucking company, I spend about 45% of my gross between salary, workers comp, and payroll taxes just to have drivers in my trucks. Second, you need to figure what the market rate is for where you will want your drivers based, meaning drivers that live in the southeast US typically make less than the drivers in the northeast. Figure out what is normal and then pay about 15% above market to help attract a good driver. This will vary greatly depending on your freight, a car haul driver expects a 6 figure salary yearly where as a dry van driver would be real happy with $70,000.

Lastly, I will caution you, no matter how much money, fringe benefits, great equipment and such you throw at them, employees will always want more, and drivers tend to be nomadic by nature so expect turnover higher than in most industries.
Click to expand...

You are awesome. SO much knowledge here!
@nmmover, thank you too!

I will start doing research on the salary route. The split seemed a bit easier for set up but I will continue to work on the model. I do plan on working with dry vans. I don't blame drivers for not being content. contentment sometimes isnt good in life. We all want more by nature

I'll keep at it. thanks again!

TransportQueen · Feb 2, 2016

RERM said: ↑

What are you gonna haul??? OTR, Regional or local??? Dedicated contracts or broker freight???? How much return on your investment are you looking for????
Click to expand...

OTR and Dedicated Contracts is the current plan.

My goal is to put 5 2012 cascadias on the road in 3 months.

TransportQueen · Feb 2, 2016

rank said: ↑

I agree with Brian, i.e. you need to establish some basics.

You need to decide how much profit you need to make in order to make it worth YOUR risk and YOUR time and YOUR capital.

What is that number?

From there you can estimate your earnings and from there you can decide on equipment and driver compensation.

So what is your magic number?
Click to expand...

I dont know what my magic number is yet. But I think I will be happy with a take home of $3,000/truck a month after all my expenses.

I need to see what that might look like with the "W2" format. I do believe in benefits. Although some are a waste, I can understand some to a degree.

TransportQueen · Feb 2, 2016

BigGee said: ↑

Just pay the driver cpm and call it a day.
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Does the cpm include benefits too? or the driver covers that?
I see I have a lot of home work to do

TaylorMade407 · Feb 2, 2016

TransportQueen said: ↑

Does the cpm include benefits too? or the driver covers that?
I see I have a lot of home work to do
Click to expand...

CPM is probably the worst way to get paid if your working with a small company. Go % so you and your driver works smarter not harder

xiipercent · Feb 2, 2016

TransportQueen said: ↑

I'm not sure if this is the norm but I do not imagine drivers should have to pay for the truck if they are "working" for their commission to drive a truck owned by someone else. (maybe I'm a bit off here)

My trucks will be fully owned by me. I dont have a lease/payment on them. Its my investment in the company. If i find drivers who are willing to drive and get 50% after all expenses on the truck they drive, I figured it could be a fair deal but it sounds like I'm wrong.

When you say "W2", what is the current range for a company driver these days?

thanks!
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what happens if you suck at booking freight? 50% of not a lot, is half of not much

TransportQueen · Feb 2, 2016

xiipercent said: ↑

what happens if you suck at booking freight? 50% of not a lot, is half of not much
Click to expand...

Well taken, i would hope the driver will also do their homework and take a calculated risk all parties should do their home work as i am trying to do now.

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