Fuel for Thought

CPM

Do you know your CPM? Surprisingly, it seems that many do not. Cost per mile, or CPM, is one of the most important numbers to an owner operator. How do you know if a load is profitable if you do not know your expenses? If you knew your CPM but haven’t looked at it lately, maybe it is time to check it again. Just as some expenses vary, so will your CPM.

Even if you are a company driver with aspirations of becoming an owner operator, now is a great time to grasp the actual cost per mile of the truck you are currently in, before plunging into the ownership pool. Just buying a truck does not guarantee success, especially if you have no idea of the cost to own one. Fuel and maintenance are just two pixels of the CPM picture.

CPM is an all encompassing calculation of the true profit and loss associated with truck ownership.

New owner operators will have a more difficult time figuring their CPM than someone who has been running their business for a couple of years without figuring theirs. Generally, you can use previous years numbers to fill in some variables, but if you do not have a previous year, you will have to estimate and then make adjustments throughout your first year.

If you have never figured your cost per mile, you can find several cost per mile calculators online with a simple search of the web. In the most basic form, take all of your expenses for a month, divide by the number of miles driven that month and you will have your cost per mile. As mentioned above, some costs will be variable, like fuel costs, repairs and number of miles driven, but many others will be fixed costs, like truck payments, insurance(s), household bills, license(s), permits, etc. Some costs may not apply monthly like permits, license(s), 2290, etc., for those, if you are doing monthly CPM calculations, just divide by 12 for the monthly cost.

If you are capable, you can create a spreadsheet with all the formulas you need to make quick calculations. The spreadsheet found HERE is designed for trucking CPM. This just one of many available online. Find the one that works for you and use it to keep track. Not knowing your cost per mile is equivalent to driving blind.

See you down the road,

Greg