I’m new to this forum. I got my Class 1 licence 38 years ago, and I have recently started to drive again with the driver shortage etc., but only 2 days per week as I also have a workshop as a watchmaker.
Probably all of you have at one point played with the idea of becoming an owner driver, and so am I. Looking at the numbers though doesn’t fill me with a lot of confidence, e.g. the hourly rate at the end of the day with very long working hours isn’t much better than what you get if you drive for somebody else.
As there are a lot of people on this forum with a lot more experience, I would be very grateful if someone could point me to the mistakes I made in the spreadsheet - e.g. are my cost assumptions too high, or the average freight rate too low, or where am I going wrong? I’ve assumed driving 220 miles in 11 hours, which reflects the more short haul stuff I do at the moment. I have days with 170 miles, and days with 340 miles, but an average of about 220 should reflect of what I do at the moment (lots of securing loads, finding places, waiting to be loaded, …)
I’m assuming to have a used tractor unit, and renting the trailers for space reasons, and as you don’t know if you will transport a container or pallets the next day …
The answer is obvious. You have to increse your profitability. What running cost is the highest? Your fuel. More so now of course.
You could take the mugs route, and try to increase your mileage, and hence your turnover, but as the old saying goes ’ turnover is vanity, profit is sanity’.
What work are you basing your calculations on? Try to increase your margin by negotiating a higher rate per mile, or find more local work, and get your mileage down, whilst working for a realistic fixed job rate.
Costings per mile is fine for sweating an asset in a big fleet, where you can pinpoint loss making trucks, but as an o/d you might have to do the pen pushing for your CPC, or for a business forecast, but the reality is based on a bit of pragmatic thinking.
I think I can guarantee there will be companies local to you, who will want freight shifting, and will be open to negotiating a suitable rate.
You know your costs, so price accordingly. You must factor in the time element of any job, and not strangle your business by committing to a fixed cost per mile.
Janos:
The answer is obvious. You have to increse your profitability. What running cost is the highest? Your fuel. More so now of course.
You could take the mugs route, and try to increase your mileage, and hence your turnover, but as the old saying goes ’ turnover is vanity, profit is sanity’.
What work are you basing your calculations on? Try to increase your margin by negotiating a higher rate per mile, or find more local work, and get your mileage down, whilst working for a realistic fixed job rate.
Costings per mile is fine for sweating an asset in a big fleet, where you can pinpoint loss making trucks, but as an o/d you might have to do the pen pushing for your CPC, or for a business forecast, but the reality is based on a bit of pragmatic thinking.
I think I can guarantee there will be companies local to you, who will want freight shifting, and will be open to negotiating a suitable rate.
You know your costs, so price accordingly. You must factor in the time element of any job, and not strangle your business by committing to a fixed cost per mile.
That’s sound advice - thank you. I totally agree that just keeping an eye on turnover isn’t the route to success. Profit is indeed all that counts.
Without looking too much into your spreadsheet, i would say your estimate for 220 miles per day is on the lower side for work rated at per mile. I would say 320m per day / 1600 per week is a closer (minimum) target in my experience.
Also not sure if its impacting your figures by too much but your fuel cost is slightly high, it has had a big increase over the last few weeks, but as of this week you would be basing on £1.10.
A lot of the costings you have converted to per mile, I would convert to per day (including all fixed costs and depreciation).
Basically you should come to costings of ‘x’ per day + ‘y’ per mile. (+‘z’ for direct expenses such as secure parking, tolls and night out subsistence for overnight jobs)
My biggest suggestion would be to forget the ‘hourly’ rate as an owner driver, but change to a day rate/salary for your costings and profit expectations. A 100 mile day could take 15 hours due to unforeseen circumstances, yet a 400 mile day could be done in 10 hours if everything goes smoothly, no two days are the same. There will also be plenty of time you will not be working as such, but replying to emails, invoicing/admin, taking calls out of hours, solving problems / maintenance on the weekends etc.
PA22:
Without looking too much into your spreadsheet, i would say your estimate for 220 miles per day is on the lower side for work rated at per mile. I would say 320m per day / 1600 per week is a closer (minimum) target in my experience.
Also not sure if its impacting your figures by too much but your fuel cost is slightly high, it has had a big increase over the last few weeks, but as of this week you would be basing on £1.10.
A lot of the costings you have converted to per mile, I would convert to per day (including all fixed costs and depreciation).
Basically you should come to costings of ‘x’ per day + ‘y’ per mile. (+‘z’ for direct expenses such as secure parking, tolls and night out subsistence for overnight jobs)
My biggest suggestion would be to forget the ‘hourly’ rate as an owner driver, but change to a day rate/salary for your costings and profit expectations. A 100 mile day could take 15 hours due to unforeseen circumstances, yet a 400 mile day could be done in 10 hours if everything goes smoothly, no two days are the same. There will also be plenty of time you will not be working as such, but replying to emails, invoicing/admin, taking calls out of hours, solving problems / maintenance on the weekends etc.
I’ve taken the mileage per day up to 250 now, but I very rarely get over 300 as I’m doing lots of local stuff, which I guess is more lucrative than the longer haul jobs? I guess that depends on your waiting / loading / securing load times. As you say, I have no two days that are the same, so I just have to come up with a sensible average.
The idea of calculating everything, including the fixes costs, per mile was to match the price you will quote per mile. If you change the spreadsheet to more or less miles, it accurately changes the fixed costs per mile. In the end, I have to give one price to a customer, rather than saying that it’s n pounds per day and n pounds per mile … In the end, it comes down to the same amount.
The “Owner driver gets per hour” is just so that I can compare to what I earn at the moment as an indication. I’m aware that there will be extra hours for the admin etc. - maybe I will add a position in the spreadsheet for that later.
Knallfrosch:
The idea of calculating everything, including the fixes costs, per mile was to match the price you will quote per mile. If you change the spreadsheet to more or less miles, it accurately changes the fixed costs per mile. In the end, I have to give one price to a customer, rather than saying that it’s n pounds per day and n pounds per mile … In the end, it comes down to the same amount.
Ok that makes sense, not the way I do it but I don’t necessarily disagree, however on that basis I would advise to do your costs based on lower mileage. Otherwise you would be out of pocket every day / week you don’t reach that target.
You should then tell the customer there is a minimum charge based on minimum mileages
Just a quick look, I’m confused about the running costs for tyres. It shows £.02 per mile but an annual cost of £2300. To recover £2300 in your calculation, would mean needing to do some 115,000 MILES per year, rather than your proposed 57,000.
Appreciate these are guesstimates, but they don’t seem to add up and it looks like we have assumed EVERY mile is claimed against a job, so no running empty or from one job to another.
Acorn:
Just a quick look, I’m confused about the running costs for tyres. It shows £.02 per mile but an annual cost of £2300. To recover £2300 in your calculation, would mean needing to do some 115,000 MILES per year, rather than your proposed 57,000.
Appreciate these are guesstimates, but they don’t seem to add up and it looks like we have assumed EVERY mile is claimed against a job, so no running empty or from one job to another.
My annual tyre cost is 2,300 which is 0.04 * 57500 - do you mean that this is too high, and you will need less money for tyres? This isn’t about recovering, this is about calculating costs …
Also, I have a percentage on the spreadsheet of running empty - 30% I believe. The calculations reflect that. Maybe I haven’t made that clear enough, but it’s taken into consideration.
That said, today I spent 3 1/2 hours at Tesco’s Magor RDC until I was unloaded. That’s a total joke, and if I would have been self-employed, I would have torn my hair out. A total of 205 miles today, with two deliveries, half of the mileage run empty, and half the day ■■■■■■ away at Tesco’s RDC. On top of that, the postcode on the paperwork was half a mile away, and I had to ask and find out where they are. That’s another 20 minutes gone.
Davlaw:
Good luck with getting a unit, my partner has been trying for weeks to start as an o/d, and the only thing we can’t get is a unit
I was thinking of a used unit, and there are some out there. I know that Ivecos have a terrible reputation, but you can get an Iveco Stralis for very little money with a decently low mileage. We all would like to drive Actros, Scanias, Dafs and MANs, but I’m all up for an economical choice…
pig pen:
I think you would be better based on 50% empty running, anything better is a bonus.
Bloody Hell, we go ■■■■■■■■ if its over 12%
I’ll stick with my figure then
Why?
Don’t choose figures that look good. Use your expectations of work.
Don’t fudge it get the answer you’re looking for.
I have 12% on one side, and 50% on the other. I assumed 30%, and that’s what I see when I work. How is that fudging??
If the work you propose doing is reliably 30% M/T then fair enough.
If you are just looking at 50% in one type of operation, and 12% in a different one, then that is a fudge.
.
Ed look at what YOUR likely running is on your type of work, not average out between different types.
pig pen:
I work prices to go there and come back, a back load is a bonus, no load the jobs still worthwhile.
Which for a small operator makes good sense.
Large outfits, with many clients at different locations can reasonably expect to be loaded more than 50% of the time, and hence drop rates.
pig pen:
I work prices to go there and come back, a back load is a bonus, no load the jobs still worthwhile.
Which for a small operator makes good sense.
Large outfits, with many clients at different locations can reasonably expect to be loaded more than 50% of the time, and hence drop rates.
Once upon a time maybe, but not now, the rates we are being offered ATM are pretty impressive, and if you can keep you empty running down to 12% or less its a very profitable industry [ATM]…
All the talk is about the drivers getting a fair wedge, but its across the board, we are getting offered £400 on top of already decent rates for one 3/4PL of German descent if we can guarantee them trailers on certain lanes
It won`t last, but it is certainly time to make hay
