Planning to become owner operator. Looking for advice.

[AMikonis1980]

I am OTR company driver and looking to buy my first truck. It seems like right now is not a very good time but I hope owner operators still make more than 34cpm after all the expenses. I tired to make some research and calculations. Looking for somebody who keeps very good track of where every dollar goes. Please let me know if I am doing right math and the numbers are realistic. Here are my calculations:


Volvo 780

Truck price out of the door $85,000.00

Trucks mileage 200000

Lifetime of the truck (miles) 1000000


Loan Interest (%) 13

Loan term (years) 5

Payment $1,934.01

All interest $31,040.67



Yearly average miles (loaded + empty) per week 3000
Yearly average pay for 1 mile (loaded + empty) $1.30

Fuel ($/mile) $0.42 mpg 5.5 fuel $/gal 2.3
Maintenance ($/mile) $0.15
Truck value decrease or payment ($/mile) $0.1063 truck price divided by truck's left lifetime
Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles
Fuel tax ($/mile) $0.00564


Interest ($/week) $116.40 whole interest divided by truck's left lifetime
Bobtail insurance ($/week) $23.33 $100 /month
Cargo insurance ($/week) $160.00
Truck registration ($/week) $47.95 $2,500 /year
Permits ($/week) $5.75 $300 /year
Highway tax ($/week) $10.55 $550 /year
Trailer rent ($/week) $116.67 $500 /month


Weekly income $3,900.00
Weekly expenses $2,610.86

Weekly profit $1,289.14

1 mile cost $0.87
1 mile pay after expenses $0.43

[Rev.Vassago]

Your average of 3000 miles per week seems high. Especially in the current market. You aren't factoring in deadhead too, I think.

[mike3fan]

.87 cpm to operate seems pretty realistic, I am in that area.

85k for a 200,000 mile Volvo.....no thanks

Where do you plan on leasing your truck onto and avg. $1.30 a mile for all miles?

If you bought a 30k truck for your first one(which I suggest) for a payment of $700-800 a month what does that do to your take home pay?

[AMikonis1980]

Your average of 3000 miles per week seems high. Especially in the current market. You aren't factoring in deadhead too, I think.

my average since october for all miles is 3300. Last three weeks been slower.

[Orangetxguy]

You have some realistic numbers and some out of wack numbers. Unless you plan on getting your own authority, you do not pay for Cargo Insurance. If you are planning to get authority, your not including the cost of Insurancce, which as a new entrant, will cost you right at $8,700 a year...or more.

Then your not including cell phone, meal money, "excursion" money, and I think that unless you plan on staying away from the NE, your toll dollars are light.

I have a headache...so missing some I am sure.

[AMikonis1980]

.87 cpm to operate seems pretty realistic, I am in that area.

85k for a 200,000 mile Volvo.....no thanks

Where do you plan on leasing your truck onto and avg. $1.30 a mile for all miles?

If you bought a 30k truck for your first one(which I suggest) for a payment of $700-800 a month what does that do to your take home pay?

85k for a 200,000 mile Volvo too much or not enough?

well for a 30k truck Im guesing would have 500 000 miles and would be more on maintenance like $0.20/mile. So it comes out $0.01/mile more

Truck price out of the door $30,000.00

Trucks mileage 500000

Lifetime of the truck (miles) 1000000


Loan Interest (%) 13

Loan term (years) 5

Payment $682.59

All interest $10,955.53



Yearly average miles (loaded + empty) per week 3000
Yearly average pay for 1 mile (loaded + empty) $1.30

Fuel ($/mile) $0.42 mpg 5.5 fuel $/gal 2.3
Maintenance ($/mile) $0.20
Truck value decrease or payment ($/mile) $0.0600 truck price divided by truck's left lifetime
Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles
Fuel tax ($/mile) $0.00564


Interest ($/week) $65.73 whole interest divided by truck's left lifetime
Bobtail insurance ($/week) $23.33 $100 /month
Cargo insurance ($/week) $160.00
Truck registration ($/week) $47.95 $2,500 /year
Permits ($/week) $5.75 $300 /year
Highway tax ($/week) $10.55 $550 /year
Trailer rent ($/week) $116.67 $500 /month


Weekly income $3,900.00
Weekly expenses $2,571.45

Weekly profit $1,328.55

1 mile cost $0.86
1 mile pay after expenses $0.44

[AMikonis1980]

You have some realistic numbers and some out of wack numbers. Unless you plan on getting your own authority, you do not pay for Cargo Insurance. If you are planning to get authority, your not including the cost of Insurancce, which as a new entrant, will cost you right at $8,700 a year...or more.

Then your not including cell phone, meal money, "excursion" money, and I think that unless you plan on staying away from the NE, your toll dollars are light.

I have a headache...so missing some I am sure.

eventualy i would like to go with my own authority but for now i would like to know numbers for owner operator working for company.

I dont eat at fast food and restaurants I take food from home. what is "excursion" money?

here is new calculations

Truck price out of the door $85,000.00

Trucks mileage 200000

Lifetime of the truck (miles) 1000000


Loan Interest (%) 13

Loan term (years) 5

Payment $1,934.01

All interest $31,040.67



Yearly average miles (loaded + empty) per week 3000
Yearly average pay for 1 mile (loaded + empty) $1.20

Fuel ($/mile) $0.42 mpg 5.5 fuel $/gal 2.3
Maintenance ($/mile) $0.15
Truck value decrease or payment ($/mile) $0.1063 truck price divided by truck's left lifetime
Toll Roads ($/mile) $0.0300 $30.00 every 1000 miles
Fuel tax ($/mile) $0.00564


Interest ($/week) $116.40 whole interest divided by truck's left lifetime
Bobtail insurance ($/week) $23.33 $100 /month
Cargo insurance ($/week) $0.00
Truck registration ($/week) $47.95 $2,500 /year
Permits ($/week) $5.75 $300 /year
Highway tax ($/week) $10.55 $550 /year
Trailer rent ($/week) $116.67 $500 /month
Cell voice + data ($/week) $23.33 $100 /month


Weekly income $3,600.00
Weekly expenses $2,474.20

Weekly profit $1,125.80

1 mile cost $0.82
1 mile pay after expenses $0.38

[GMAN]

You cannot afford to make a $2,000 truck payment in this economy. You need to look for a truck that you can pay less than $20,000. At the most you should not spend more than $25,000. I have seen some decent trucks for much less than that $20,000 lately. If you start out spending that much on a truck you are already in serious trouble before you turn the first mile. Start with a less expensive truck that gets decent fuel mileage and won't kill you making payments. You could pay cash for a truck for what you will need to pay down on an $85,000 truck. Your down payment is likely to run from 10-30%.

One thing you left off of your costs is collision insurance. That can run from about 2 1/2-4 1/2% of the stated value of the equipment. You will also be required to have either workers comp or an occupational accident policy. The accident policy is less expensive and should run around $140-150/month. When you lease to a carrier they will require you to pay an escrow account. Most seem to be around $1,000. Fuel taxes should not run more than $25/month. If you watch where you buy fuel it could be less. You will take time off during the year. I would expect that you will average somewhere between 80-130,000 for the year.

Rates are very low right now. We don't know where the bottom is. You seem to be fixated on a 780 Volvo. I would look for something that is more affordable. It is much easier to survive when your overhead is low. There are a number of expenses that you don't think about until something happens. Some people have the misperception that a newer low mileage truck is not likely to break down. That may or may not be correct. This is a business. Starting out you need to keep expenses low as you learn the business. While it may not seem like it now, it is a big transition from being a company driver to that of owner operator. When you own the truck those expenses go on whether the truck moves or not. You will likely be doing some sitting, especially this time of year. It isn't that I want to discourage you from pursuing this but you need to be realistic about your expectations and costs. It will be much better for you to buy a truck where you can either pay cash or keep your payments between $500-800/month. Buy an affordable truck and save your money. In fact, you could save the difference between that payment and what you plan to spend. When the time comes you can trade up and either keep your payments low with the additional money being used to pay down the cost of the truck or pay cash and continue saving. I am very thankful that I don't have big truck payments at this time. Frankly, I don't see how you will be able to make it if you commit to a $2,000/month payment.

[southernpride]

Well. Hmmmm.... Your numbers seem ok i guess. I dont have much experience yet as an o/o but here are mine.

Avg pay per mile: 1.04 (including deadhead)
Avg Fuel cost: 0.355/mi
Avg Maint. .04 (NEW TRUCK)
TOTAL FIXED EXPENSES: $840.14
-Payment
-Fuel tax
-Prepass
-Qualcomm rental
-Insurance (upgraded coverages)
-Accounting fees
pretty much everything but income taxes, fluids, and fuel.

After fuel, My pay is 0.645/mi
Heres the kicker..... I'm a driver trainer, and dedicated JIT, and i milk the system for all it's worth. My Miles avg is 4237/wk for the last 13wks. I have also taken over 3 weeks off total over that time. so go figure.

I set up an s-corp and pay myself 1000/wk and if avgs remain the same then ill gross close to $100,000 before training bonuses. after tax and other expenses, ill take home around $70,000. I am not going to be taking nearly asmuch time off, but who knows what this economy is going to do.

Best of luck dude.

[devildice]

I am still "new" as I have only been an O/O for a little over a year now and therefore won't attempt to give you any advice. However......why buy an 85k truck right off the bat? I bought a 2001 Western Star with 500 and something on the ecm and 2003 Transcraft trailer for 51k for both. In the year I have had them, I have spent around 5k in repairs on the truck and 3k (tires) for the trailer (not including regular maintenance). She's a strong running truck and gets decent fuel mileage. I guess what I am getting at is before you commit to that Volvo, why not shop around for a better deal? A good used truck with a few more miles on it does not always mean you will pay more to maintain it than a newer one with fewer miles.

[catalinaflyer]

I don't think DD could have hit the head of the nail any more square. I'm not currently an owner-operator and have no desire to do that again. But, I can't see jumping into an $85,000 truck right off the bat and more so an $85k truck with 200,000 miles on it. There are waaay to many good deals out there right now and even though I don't know all the particulars on that truck it sounds awfully high priced.

2 years ago I was able to pick up a 2003 T600 with just under 400,000 on it with the balance of a 750,000 mile extended warranty for $46,500 out the door. The truck was a former CFI truck that had a pre-emissions ISX in it with a 13 speed. Granted it's not loaded with all the owner-operator goodies but it was very well equipped including a lifetime subscription to XM and a real refrigerator in the bunk. Other than a little light on gauges the rest was fine. Along with the truck came a file on CD that contained every single thing done to the truck since the day CFI took delivery of it right down to changing a light bulb in the sleeper. I picked up the truck in Dallas, TX and MHC at 7:00pm one evening, bobtailed back to Wynnewood, OK and hooked up to the trailer I had paid for on the way down to Dallas at 10:00pm that night. I loaded the wifes car in the trailer, drove back north through a tornado to Wichita, KS, unloaded her car at 4:00am in the morning, loaded 18 motorcycles in it and was sitting in Jackson, MS at The Great Southern Motorcycle Rally the next morning at 7:00am. That truck to this day has not had one single thing go wrong with it and pulling a 53' Featherlite trailer grossing 74k all the time it still gets over 7mpg. Now with all that being said, it wasn't my money, I was running an older KW with a 14' bunk and a three axle Aerolite race trailer but on my way to Daytona a few weeks before the trailer broke the main frame on both sides right at the step. Needless to say we had a full schedule of shows so when Daytona was over the big boss's at Big Dog gave me a $250,000 limit for a replacement truck and trailer. The trailer wasn't my first choice but it was the only one in the country available immediatly and it was already Big Dog red so then I had to find a red truck. I grabbed a Truck Trader paper and called MHC in Dallas and without even haggling on the price (they had it listed at $51,500) they took my cash offer of 46,500 and I told them I would be there the next afternoon to get it.

As for the numbers you have come up with, may I suggest you send a PM to the member on here chris1 and see what he has to say, he's been an owner-operator for something like 30 years and now owns his own trucking company with 20 something company trucks and even more owner operators pulling for him.

Here's the truck I picked up, now that will also let the cat out of the bag on my other thread.

[chris1]

13% interest rate? Pretty high unless you have done something to deserve it.
.15 rep/maint on 800,000 life is 120,000.00 in an 85,000.00 truck. Pretty high unless you are also using that # as a replacement then it's low.
You don't need to have a new truck but if you couldn't make it with new truck payments you better look at your operation,you're not making enough. Thinking you need low or no payment to make it is a great business plan to start out thinking about failure.

[GMAN]

You don't need to have a new truck but if you couldn't make it with new truck payments you better look at your operation,you're not making enough. Thinking you need low or no payment to make it is a great business plan to start out thinking about failure.

Actually, starting out with no payment or a low payment is good business, especially in this economy. Owner operators are losing their equipment in record numbers. Rates are lower than I can remember in a number of years and freight is sparse. While I think things will get better, a good businessman plans for the worst that can happen. If someone starts out with a big truck payment they may find it difficult to survive in the current economic situation. Everyone whom I know who has been in this business for many years is having difficulty. EVERYONE!! If experienced owner operators and carriers are having a difficult time someone starting out will find things even more difficult. I am a firm believer in spending less than you can afford. He may or may not be able to afford a $2,000 truck payment. He will base that on his ESTIMATED income. His actual income could be more or it could be less than projected. Most people buy newer trucks in part because they think they will be protected by a warranty should something happen. There are a number of things that can break and a warranty will not cover it. For instance, most turbo's have a 150,000 mile warranty, as I recall. Last year I had to replace a turbo on one of my trucks and spent just over $2,700 for parts and labor. My truck had been out of warranty for some time, but if a truck has more than 150,000 miles on it then the warranty would not have helped. I have another truck that dropped a valve just after the newly rebuilt engine was out of warranty. It cost almost $7,000 to get it out of the shop. I find that most people over estimate income and under estimate costs when entering this business. If you are paying everything out for a truck payment then there is nothing left to make repairs or get you through should something else happen, such as freight not being available. Trucks are sitting more right now, sometimes for days at at time. That means there is no income for those days. I am very thankful that I don't have big equipment payments. That didn't happen by accident. I could have bought new equipment and had big payments. I chose not to do do so. You can obligate yourself for a big payment if you want. I will continue to operate frugally and hopefully be in a good position to survive. I will also encourage others who want to enter this business to do this as well.

[chris1]

I did not say you had to make that payment,just that if you can't you're so called "business" does not make enough profit. You say that "everyone you know" is having problems. I've been in this and other businesses for many years. The only ones that i know having problems were those that tried to cut it to close,live out of there means and just plain lazy.

[RostyC]

I'm not disagreeing with OTG because insurance can vary but my first year cost me 6954.00.
I agree with buying a cheaper truck starting out, just look closely before you buy. You can always upgrade later when your business gets up and going and the economy turns around.

[thbogle]

You may want to check with local auction houses and dealers before making your purchase. I have seen trucks of all years and makes going for 6000-24000. There was a 02 KW T600 I couldnt see or hear anything wrong with it go for $6500 last weekend at the auction house. (if i had the money it would have been mine)I have seen 99-01 frt fld's and centurys going for 7000-9000 reguarly from dealers. The truck market prices are down and if you have the credit you could pick up a truck and trailer for less than 25000. Theres nothing wrong with getting a cheap starter truck to run for a while to build up the bank account. In this market that may make the difference between making it and loosing your shorts.

[GMAN]

I did not say you had to make that payment,just that if you can't you're so called "business" does not make enough profit. You say that "everyone you know" is having problems. I've been in this and other businesses for many years. The only ones that i know having problems were those that tried to cut it to close,live out of there means and just plain lazy.

Those that I know are neither lazy or cutting it too close. One has had his authority for more than 22 years. Another gave his up due to a lack of freight in his area and leased to Mercer. Schneider, Covenant, JB Hunt, US Xpress and others are all reported to be having problems and these are among the top 8 carriers in the U.S. Great Wide filed for bankruptcy. They are a billion dollar company. There have been thousands of owner operators who have lost their equipment in 2008. Hundreds if not thousands of carriers of varying sizes have closed their doors. Not all were poor businessmen or lazy. Some of those companies had been in business for decades. Even those carriers who are debt free are having difficulty. Yes, there are some who don't have any debt. We are in an economy that we haven't seen in recent history. Those of us who have been in business for many years have NEVER seen an economy like this. When people cannot pay their mortgages or monthly bills they don't go out and buy products. If companies are not buying products then they don't need to replenish supplies. No supplies mean that they don't need trucks to haul freight. Granted, there are those who are hauling cheap freight. In fact, I am not seeing much in the way of decent rates no matter where we go. Truck dealers are also having problems due to the trucking industry being off. I don't think all of them are lazy, living beyond their means or cutting it too close. We are in a global depression. That is the current reality. About the only difference between the "Great Depression" of the 20th century and now is the unemployment rate. So far it hasn't hit double digits. Hopefully, it won't get that bad. Brokers, shippers and carriers are all having problems. If you are in trucking and your business isn't off then you are either living in a bubble or very fortunate. You are doing what the major players in this industry have not been able to do.

[chris1]

The "lazy" people i was referring to are the ones that do a minimum amount of work and then are critical of the industry when they can't afford to pay upgrades/repairs. They lay the blame on anyone/anything but themselves.
I agree that times are bad now but companys large and small go out of business every day in good or bad times. You can't have winners without losers.
Maybe i'm fortunate to be in the food industry,jan09 sales are up 12% over jan08 net is up 4%.

[rank]

I suppose this may seem like a negative comment, but you will go broke in that truck. Most of the others have you given you good advice. Take heed.

1. $85,000 for a 200,000 mile truck? Last year we bought a 2008 zero mile T660 with a 485hp ISX for $115,000 CDN.

2. 13% interest? Can you afford to lose that much revenue and still survive? Margins are thin enough out here as it is.

3. 3000 miles a week? That's do-able but too many to base a business plan on. Try 2,500 and the extra 500 can be a bonus.

4. What happens if you can't drive the truck? Do you have some form of insurance to cover the truck payments?
Read this how to get out from under your truck loan

5. You need $15,000 cash on hand for maintenance in the first year. Budget $10,000 every year thereafter. Again, cash needs to be on hand.

6. Are you currently driving? Have you not noticed that the truck stops are full of guys waiting 2-3 days for loads?

7. I don't like basing your business plan on $1.20 for all miles these days. Are we talking about dry van? This week I posted a flatbed load + tarp. PU 150 miles S of the former hotbed of Atlanta for DEL in the Montreal - Toronto corridor. I had MANY of offers from CARRIERS (not o/o's) at $1.18 ($1475)and below. Throw in the 150 miles DH and that is $1.05/mile including the tarp fee. He deadheaded 150 miles in the WRONG direction to get this load, and HE set the rate. He told me he would be happy with $1475 but he would do it for $1300. I just didn't have the heart to pay him $.93 for all miles incl tarp.

Do not ruin your life with an $85,000 note at 13% this climate.

[heavyhaulerss]

Planning to become owner operator. Looking for advice


are you serious????????