[GMAN]

One major mistake those just starting out make is under estimating costs and over estimating profit. There are a number of smaller expenses often over looked. While I don't think that one needs to make $2/mile to be profitable, unless you make a fair profit, you won't be able to stay in business very long. Whether you have payments or not, at some point your equipment will need to be replaced. Money should be set aside for that purpose. I don't put a load on my truck for less than a certain amount of money. There are those who will haul for much less than I will. They are like the guy I met several years ago who was hauling freight for $0.78/mile and thought he was making a killing. He didn't understand that he was going broke with every load. It has been a number of years since I have hauled for $1/mile. Fuel was about $0.80/gallon back then. From my perspective, unless I can make more money owning the truck than driving for someone, I don't see any reason to buy a truck. If you have a big truck payment your cost of operations will be higher than if you either have low or no payments. In both cases, money should still be set aside to replace your equipment or make major repairs. I have had 2 drivers work for me who lost their trucks when a major expense came along, because they failed to put money aside to take care of this type of expense. They were also running for rates that were too cheap. They made more money working for me than they did owning their own trucks.

[sk]

So 90cpm (rate) - 69cpm(cost) = 21cpm to the driver/owner :shock:

[Paul McGraw]

Originally Posted by oldmanrandy

Paul Mcgraw said,
To cut to the bottom line, operating a truck is going to cost you .75 to .90 a mile including fuel, insurance, taxes, repairs, depreciation, etc. That is before paying yourself ANY MONEY

Question: Since I am looking at an 03 at about $50,000 and the depreciation will be less do I then add on a higher repair cost, which in effect leaves your numbers the same.

Yes, the older the truck the higher repair expenses are likely to be. However, I suggested a range for a reason. Some people just get lucky and have a truck with few problems. Others get unlucky and get a truck with many hidden problems that don't show up till you have put 100,000 miles on the truck. Some people are great mechanics and can do all of their own work and thus save tons of money. Some people dont know the difference between a torx and a torque and have to pay for everything that needs doing. Repair expenses are therefor going to be the biggest variable, and basicly the older the truck the higher the expense.

[Paul McGraw]

Originally Posted by Dejanh

90cpm to operate a truck is one of the urban legends that keeps on going on on these boards day in and day out, people please be reasonable when posting number figures as alot of folks who are planning to make their bread in this buisiness read these statements and get their info from here....i understand the drive for higher rate but certain individuals make it sound that without at least 2$ per mile you are cut to loose everything which is not true, i dont have it and am doing quite well...we hear enough BS on the CB radio, lets make this place at least a little more informative.

Fuel at 6mpg at $2.40 per gallon is .40 per mile.
Tires at one set of steers every 100,000 miles and one set of drives every 200,000 miles is .02 per mile.
PM's at $220 every 15000 miles is .015 per miles
Insurance at $8600 per year for an independent driving 100,000 miles per year is .086 per mile.
Truck purchased two years old for $70,000 and sold traded in four years later for $25,000 equals depreciation of $11,250 per year or .113 per mile
Interest on the loan for the truck assuming $50,000 is financed at 9% interest is .027 per mile.
Fed 2290, Tag and Permits (varies by state of course( $2,400 per year or .024 per mile. We will assume you balance fuel purchases perfectly by state so no extra IFTA tax need be paid.
Repairs other than PM and tires $800 per month on average per ATA is .096 per mile. If you have a newer truck or can do many repairs yourself reduce this amount. If you have an older truck or never even put in a lightbulb yourself increase this amount.
Cell Phone, fax, document service, air cards, paper, postage, computer & computer software, accouting and tax service, etc. $250 per month or .025 per mile.

Summary
Fuel .40
Tires .02
PM's .015
Depreciation .113
Interest .027
Insurance .086
Vehicle tag and permits .024
Repairs .096
Phone, fax and other services .025
Total per mile .806 or round off to .81 per mile.

Notice we have not included anything for driver pay, social security, workers comp, medicare, income tax, or health insurance.

Adjust any of the above to reflect your actual situation if different. Please dont tell me this is not proper tax accounting. I have a background in economics. This is called management accounting acording to Financial Accounting Standards Board FASB rules which attempts as closely as possible to reflect real world cash events.

[brian]

Originally Posted by sk

So 90cpm (rate) - 69cpm(cost) = 21cpm to the driver/owner :shock:

maybe some other owner but not me, I never said I ran for 90cpm only that it cost me 69cpm to run

[rank]

Originally Posted by Dejanh

90cpm to operate a truck is one of the urban legends that keeps on going on on these boards day in and day out, people please be reasonable when posting number figures as alot of folks who are planning to make their bread in this buisiness read these statements and get their info from here....i understand the drive for higher rate but certain individuals make it sound that without at least 2$ per mile you are cut to loose everything which is not true, i dont have it and am doing quite well...we hear enough BS on the CB radio, lets make this place at least a little more informative.

At .90, you took the high side of the .75 -.90 range that was given earlier.

So, what do you estimate the expenses at?

To the original poster, I estimate truck maitenance at $10,000/year/truck. Some years it's less, but we just put a new cylinder head on a truck we bought two weeks ago. After the new head, Prestone went missing again so it's back in the shop to have the head off again. Twice in one week. I can't wait to see the bill for this.

[oldmanrandy]

Nice explanation, Paul McGraw.
So if I understand.
If you save from each payday, the tires,PM,Depreciation,and repairs
or approx. $.25 a mile then you will always be prepared not only for the fixing but also the replacement costs.

[jnk2001]

Originally Posted by oldmanrandy

Nice explanation, Paul McGraw.
So if I understand.
If you save from each payday, the tires,PM,Depreciation,and repairs
or approx. $.25 a mile then you will always be prepared not only for the fixing but also the replacement costs.

This is a nice insight to what really goes on owning your own truck. The best scenario is to own a truck out right. Interest will kill ya, and after awhile, you'll feel like you are working for everyone else but yourself. all the responsibility, risk and a small reward(some will disagree about the reward part). Unlike other businesses, your truck depreciates. So, question for O/O's, why do it?

[no_worries]

Very few businesses get started without borrowing money from someone and they all have accounts payable. If the fact that you have interest expenses, maintenance expenses, depreciation, etc. makes you feel like you're working for everyone but yourself there's a simple explanation...you're working too cheap. Why do it? For the same reason that most businesses are started, to make a profit. Some will tell you it's about the freedom of working for yourself or being paid to be a tourist. That's all well and good but if they aren't making a profit they won't be enjoying those things very long. Not making a profit? Best find something else to do. I would.

[GMAN]

You are correct about most people borrowing money to start their business. However, most have money of their own to put into their venture. Business owners must be careful, especially starting out, to not over spend or over commit on monthly expenditures. If one person has a $500 monthly truck payment and another has $2,000, their cost of operations could be significantly different. That is why when we discuss operating costs that there could be differences between several different owners. There really is a difference in operating costs. Another factor to consider is the type of truck. If one buys a 379 Peterbilt and another buys a 387 Peterbilt or other type of aerodynamic truck, there could be a 20% or more difference in fuel costs. The 379 may not get more than 5-5.5 mpg, while the 387 may get 7 mpg. Over the course of a year, the costs can be significant.