How Company Drivers Can Determine Their Profitability
Susan is a new driver who is evaluating a job offer from ABC Trucking paying $0.30/mile with a minimum of 2500 miles/week. The recruiter assures her she will earn at least $37,500 over a 50-week work year, but will the promised compensation package be sufficient to pay her family’s household bills? To answer that question, she must adopt an owner mentality focusing on accounting for costs and establishing weekly revenue (income) targets to cover living expenses.
The recruiter relied on a 50-week work year, however, this figure assumed the driver would never have a breakdown or have other delays. Smart drivers account for this by subtracting some non-income earning weeks using a 5-day workweek at 2500 miles[1]. Any non-income weeks that can be eliminated can be treated as pure profit.
The next step is a detailed accounting of monthly household expenses.
The table reveals that to cover her monthly household expenses she will need to earn:
- No less than $696 / week, or
- No less than $0.28 / mile
She can measure her progress by subtracting each trips earnings from the $696 minimum weekly income target. In the below example she netted $77 over her target for week 1. However, at the end of week 2 she had a breakdown and missed her revenue target by $164.
Experienced drivers use income target tracking to communicate with dispatchers throughout the week to secure the necessary miles / loads to reach their goals or make up for missed revenue weeks.
Adopting an owner mentality that focuses on accounting for costs and meeting weekly income targets are key to becoming a successful (profitable) truck driver.
This article was written by Mark W. Sullivan, EA, who has been providing taxpayer advocacy, consulting, and litigation services since 1998. Mr. Sullivan is tax counsel for Per Diem Plus, an automated per diem and expense tracking mobile app for truck drivers.
Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.
Copyright 2017 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.
[1] Adopted from The Trucking MBA podcast Bill Hood, “Partners in Profit | Tracking Fixed Expenses and Revenue” (2015)
