Hello, passionate trucking owners and life-long learners. I’d like to introduce a 10-article series that will dig into the most common mistakes we see owner-operators make. 

We’ve worked with hundreds of owner-operators over the years at TrueNorth. We’ve cataloged the most common habits of successful carriers -- as well as the most common pitfalls of those who did not succeed -- to create this list. 

The first thing I see expert carrier owners do as they prepare for their year ahead is to set targets for overall revenue, costs, and profit. This sounds simple, but there are a lot of factors that go into calculating your profit per mile and over time.

I remember doing this with my cousin Tom as he prepared to start his own business. I’ve been lucky to watch him evolve his method over time, and to witness other carriers use these metrics as their north stars to guide them to profits year after year. 

We’ve made a Profit Calculator app to make this method easily available to everyone, pre-loaded with values for a standard Dry Van truck. You’ll be able to run different scenarios and see how the results compare -- a feature we weren’t able to find in existing online calculators. Read on below to see the factors that go into the calculations. 

How to calculate your profit per mile and over time

Map out your Fixed and Variable Costs

Fixed costs are costs you’ll incur even if you stay put. For example, even if you don’t haul freight in a given week, you’ll still need to make your truck payment. 

Variable costs are costs you only incur when you drive. The largest of these is fuel -- fuel can account for 50% of your total expenses when prices are high, like they are now! 

Set revenue, mileage, and time off targets

The two factors that will most affect your end-of-year profits are Weekly Revenue and Weekly Mileage. It’s important to show these two numbers accurately, otherwise your end result will not reflect reality. We also account for time off, as those are weeks you’ll be incurring Fixed Costs with no revenue. 

Run the math

If you’re using our Profit Calculator, you just click “Save” and you’ll see the results in the History tab. If you’d like us to walk you through the step-by-step calculations, please email support@truenorth.com and we’d be happy to set up a session with you.

The most common mistake that kills profits

The #1 failure mode we see is not accounting for Opportunity Cost. The Profit Calculator lays that mistake bare when you think about Fixed Costs vs Variable Costs. 

For example, imagine you’ve landed in the Denver area and rates are $1.50 to get out of the region. Your calculated Cost Per Mile (CPM) is $1.55, so you know you’ll lose money if you take a load at $1.50.

In most cases, it would be a mistake to sit until rates increase. You may not get a good-paying load for many days. If you were to sit for 48 hours, you’d incur about $400 in fixed costs and you’d lose out on $1600 of potential revenue. Your opportunity cost is $2000, not $400.

You would have been better off taking that $1.50 load into a hot market zone, like Chicago. You’d have earned $1300 and still have had time on your clock to pick up your next load, which earned a healthy $2.90 per mile. 

Tell us what you think

I’d love to hear how you put our Profit Calculator to use, and if you have any suggestions on how to improve it. Please email marketing@truenorth.com and mention the calculator, and I’ll personally review every response. 

Happy hauling,

Jin Stedge

TrueNorth CEO