# Cost-Per-Mile Calculator

Knowing your cost-per-mile (CPM) is critical for the success of your trucking business. It's a barometer for the health of your business, and it determines your profitability. We created a quick and free CPM calculator that you can use on-the-go.

## Why is it important to know your cost-per-mile?

According to 2020 OOIDA research, owner-operators who know their cost of operations **earned $1.00 more per mile and over $700 more per trip** than those who did not know.

Knowing your cost-per-mile informs you of what rate-per-mile you need to be profitable. You'll know which loads you should bid for, the regions best for your business and when you should negotiate with customers. The cost-per-mile also supports important business decisions, like purchasing and financing your truck. How much down payment do you need to put down, or how much interest can you afford to pay each month?

## Steps for calculating your cost-per-mile

The below steps assume a monthly timeframe, but you can adjust the timeframe to weekly depending on your needs.

### 1. Estimate your Monthly mileage

First, you'll want to approximate how many miles you drive in the month.

Don't forget to add in deadhead miles, since you are incurring costs (fuel, time, potential maintenance) even if you're not bringing in revenue.

*For example, we drive 11,000 miles which includes 1,000 miles of deadhead. Our monthly gross revenue is $24,000*

### 2. Know Your Fixed Costs

Think of the fixed costs as those costs that do not change no matter the number of miles driven. Because these costs are usually constant and predictable, the more miles you are on road, the lower your fixed costs will be per mile. Similarly though, if you're not driving at all, you will still incur these costs.

Fixed costs include:

- Truck and trailer payments
- Insurance (cargo & liability, occupational accident, bobtail)
- Health insurance
- Registration and renewal
- Permits

You'll want to sum up all of your fixed expenses to get your Total Fixed Costs.

*In this example, our Total Fixed Costs for the month is $3,750.*

### 3. Determine your Variable Expenses

Variable expenses keep your truck on the road, but as the name implies, they can vary day by day. Variable expenses directly correlate with how much you operate your truck. The more you drive your truck, the higher your variable expenses will be.

Examples of variable expenses include:

- Fuel
- Maintenance and repairs
- Tires
- Carrier, dispatch, brokerage or factoring fees
- Meals and lodging
- Tolls

Add up all your variable expenses to get your Total Variable Costs.

*In our example, Total Variable Costs is $11,500.*

### 4. Calculate Your Cost Per Mile

We now know that we have driven 11,000 miles for the month. Our Total Fixed Expenses are $3,750 and our Total Variable Expenses are $11,500. Adding our costs together gives us Total Monthly Expenses of $15,250.

Next, take your Total Monthly Cost ($15,250) and divide it by the number of miles driven (11,000). This gives you your CPM of $1.39. This is how much it costs you to drive one mile and the rate you need to make per mile to break even.

We can further break down CPM into Fixed and Variable components ‚Äî take each of the Total Fixed Costs ($3,750) and Total Variable Costs ($11,500) and divide them by the total miles (11,000).

*In our example, the Fixed component is $0.34 per mile, and the Variable component is $1.05 per mile. Our Total Cost Per Mile is $1.39.*

The total cost per mile can vary dramatically depending on your individual situation, but variable costs are typically the bulk of the expenses, in this case 75%. That's why being able to save on things like fuel can make a big difference on your profitability particularly when you're OTR and driving weeks or months at a time.

In this example, we used total monthly numbers to calculate CPM, but you can apply the same methodology to a daily, weekly, quarterly or yearly basis.

Using our free CPM calculator, you can also save your cost-per-mile calculations and see how changes you make to your business can boost or hurt your cost-per-mile and profitability.

Like running any other business, it's critical that you understand your costs. The more you know, the more successful you'll be at reducing those costs and becoming more profitable in the future.

**Related articles:**

How to Get the Best Freight Rates

Deadhead Miles: Costs and Opportunities to Your Bottom Line

Fuel Economy: Part 1 - The Driver Makes All the Difference

4 Expert No-Cost Fuel Economy Tips