Variable Costs-Per-Mile: How To Understand Them Vs. Fixed Costs

You are currently viewing Variable Costs-Per-Mile: How To Understand Them Vs. Fixed Costs
Variable costs-per-mile are a major factor to consider for your trucking business.
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When running on a trucking business as your main profit, there’s much to handle, as the costs are important to take good care of. After all, with all the miles that pass by, someone needs to keep track of what’s left to see how revenue is generated properly. And as a chief financial officer, rising variable costs-per-mile that come in trucking could especially be a pain when there are way too many confusions that happen because of them. So here, we can explain the fundamentals of operating costs and why if you play your cards right, you can save up to tens of thousands, annually. And what type of CFO wouldn’t want to do that? Saving money is paramount when running a carrier, a fleet or even your own independent trucking business. So to think constructively about all the money you can save when it’s one penny per mile, throughout a near estimate of 100,000 miles, annually, can easily save you just about $1,000 for a whole year.

First rule-of-thumb: Costs never remain the same.

One month, you may have your truck(s) hit about ten thousand miles and then four thousand more in the following. And what can you do then but notice how there are two separate costs for either month? The pennies you can save per month could easily impact how much you spend while stuck in paying off a truck loan. Fixed costs that aren’t lowered properly may impact your spending moreso in the future if not properly monitored. That said, it’s always helpful to reduce the cost by driving even more miles. The differentiation per mile in that instance is about 0.8 cents, which in itself could appear as a small change. Fractional at best. But with the “one penny saved” rule, you can easily save $1,000 per year.

Other ideas? Save those dollars of profit.

Each dollar of revenue can only in part count as profit. However, the extra dollar of costs themselves can still benefit you, being that the whole dollar is easy to contribute towards your success and long-term profit. Costs themselves are not able to be seen on a per-mile basis on their own. When you have your miles resulting in lower costs-per-mile, the variables could be very helpful. Now, as the cost-per-mile is reduced, revenue goes up for every extra mile, therefore coming in at two times the benefit per mile.

In these days of sky-high rates for diesel gas, it’s more than important to think about these measures. For more on this topic, we recommend you check out this video for an in-depth look in calculating cost-per-mile.

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