Understanding owning and operating a truck is perceived as a numbers thing it seems as many people boil the "easy part" down to operating cost per mile. I see this and continue to have questions. Contained within cost per mile almost always includes the following:
What are any other things that you include on your cost per mile numbers?
What are the things you add to your cost per mile?
How do you factor the variables such as tolls, tarp, multi stop, ramps, washouts etc and do you upcharge these things to account for your time of business related expense (office time) on them. I'm sure there's a ton more that can be mentioned, please feel free to discuss as much as you're comfortable, without giving away all your secrets. It seems to me that so many new to the industry just wanna throw a number out when trying to get a load on XYZ lane and don't understand business enough to really maximize what they can get because they don't want to put in any real work beside a phone call, look at what DAT lane rates are and toss a number out.
The Business End... (no pun intended)
Discussion in 'Ask An Owner Operator' started by SoDel, Feb 9, 2019.
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You mean there is more cost then truck payment and fuel? I’m confused.
ElijahJohn1 and pavrom Thank this. -
Ultimately, all of your expenses divided by all of your miles is your cost per mile.
I glide 47 Thanks this. -
Ok.... it looks like you're asking two questions. 1) How to calculate your cost per mile...or what goes into cost per mile? 2) How to calculate a rate or give a rate quote on a load?
When dealing with the spot market (load boards) there's really only one way to calculate a rate and that is to find out what the going rate is for any and all loads your interested in. That means you're not really doing a calculation with regard to your cost per mile at all. Because it doesn't have anything to do with what you can get paid for a load at that time.
Let me know if I need to elaborate on that at all. I'm not sure if that's what you're asking about or not.SoDel Thanks this. -
I guess it is like you broke it down to, just asking if there is more than quoting the going rate on a lane. I get the idea for cost per mile (expense/miles driven in a given period=cost per mile for item). I was wondering if there was any thing above an beyond the "standard" expenses mentioned above. It seems like something so simple yet so much of the profit rides on the rate. Ive always found owner operators to be pretty savvy businessmen and to just take the "status quo" and run with it seems like they would be leaving money on the table somewhere along the way.
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If the truck was fully ready to roll on a load. Every item you would need is covered. Think about what all those items are. Now if that truck never moved for 30 days, what expenses would be due at the end of that 30 days.
All those bills and 1/12 of anything that is paid once per year are your fixed cost. Everything else is variable cost. The thing that surprises most is the few items that fall into the variable cost category.SoDel Thanks this. -
Thank you for explaining that. On something such as tolls, do you pass the cost thru to the quote or do you add to it, think like an administrative fee? Actual toll cost say is 100 dollars, do you it mark up to say 110 to account for you having to have the ezpass and take time to pay that bill etc?
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I just make it part of the cost before making the run, I already know for example to build 200 dollars extra into the qoute I give to a customer of my services before I make the run up the pike and across the GWB. It's not my expense other than for tax purposes. Mr Apples have paid the bill, if HE wants to make a profit in his stores he will have to increase the apples another ten to 20 cents a pound at the shelf. Let the people pay that toll.SoDel Thanks this.
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Got ya, thank you for hopping in on this, I have always respected your expertise. If I may ask, do you have a "method" for building your rate quote? I guess Im looking for the businessman answer / system instead of the people that just go off what the lane is paying that moment. What are the differences in how you quote spot vs contract?
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I learned in the Tavern doing seafood baskets of crabs, if the rate on the natural gas of cooking exceeds say 3000 dollars for the month we need to try and price the crabs just a little bit in our favor to try and offset that huge gas burn steaming them things. But we did not want to gouge the people coming in to enjoy the seafood either.
In general natural gas for cooking crabs came to 100 a day, payroll for a cook and server came to around 9 dollars a hour in those days for a full 16 hour day for the two of us to serve and fix crabs to make people happy. We needed to sell enough seafood to make it worth our while every one of those 30 days.
My thoughts are way way beyond just someone in the kitchen hired to do dishes 8 hours a day, but it shows that there were people who tried to teach me the business possibly when I was young to see if I had a apitude or interest in taking it over some day.
I am not a expert in billing for truck services, we negotiated with a trucking company for a actual 18 wheeler to go to Fairbanks and load a house for Arkansas and after careful talking and negotiating rates from top to bottom we realized that for 5000 dollars that it would cost us to get it done to one very happy company and driver who was going to come back empty anyway... we could get the same furnature retail here in Little Rock and so did not follow through with the load. The local goodwill became the happy reciept of that stuff.
It's a little bit out of my wheelhouse when I haul loads here and there and yonder and then order a big rig to haul a load to me as a reciever knowing it costs a great deal more than 5000 dollars to get out of Fairbanks overland.
The rest of it is literally a few thoughts from fleet owners who tried to show me how expensive it is to send a truck to get a load. They meant well, but in today's age of computers they were obsolete.SoDel Thanks this.
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