How to Calculate CPM

Gather all your receipts for the month and separate them into categories. You can make as many categories as you like, the biggies are fuel and maintenance. Here are some examples:

Fuel
Maintenance
Tires
Supplies
Insurance
Showers and Laundry
Misc.

Once you have all your receipts for the month gathered and separated, pat yourself on the back. That's the hardest part! Yeah, the math is coming up but what gets most truckers into trouble is letting the paperwork pile up.

**Tip**
Go to Walmart or Staples and buy a box of big 8x10 manilla envelopes and use one for each month. Put all the receipts for the month in each envelope as you get them, and at the end of the month you won't have to go tearing up your truck to find them.

It's not nearly such an overwhelming task when you are organized and if you put the receipts all in one place as you get them, you won't lose them OR the tax deduction!

OK. Here's where the rubber meets the road. The tools you need:

* all receipts for the month, separated by category
* total number of miles for the month
* calculator
* pen & paper

First, a word about miles. The most honest picture you will get of your operation is to use truck miles not just paid miles. All truckers know that we end up driving more miles than we get paid for, that's just a cost of doing business. On the first day of the month, write down your odometer reading on the receipt envelope. Record the odometer reading on the last day of the month and subtract the beginning number from the end number. This is your Total Miles for the month. Easy and accurate.

The thing to remember when calculating Cost Per Mile is this: Divide the money by the miles. Repeat that until it's stuck in your brain like a bad song. Divide the money by the miles. Divide the money by the miles....

For example:
You spent $1,500.00 in maintenance for the month. You drove 11,000 miles.
Divide $1,500.00 by 11,000 =.136 A little over 13 Cents Per Mile. See?

In other words, for every mile you ran (11,000) it cost you 13 and 1/2 cents.

Let's say you spent $800.00 on tires and drove 11,000 miles.
Divide $800.00 by 11,000 =.077 almost 8 Cents Per Mile

Remember, divide the money by the miles. You can check if your doing it right by doing it backwards. Money times miles.

(I always round up if the third digit is 5 or higher. So .077 I call .08)

Calculate your cost per mile in each category. Then, to get the total picture, add up all the categories to get one total for the month. All expenses for that month, everything from fuel and maintenance to shower, phone, supplies and all those various insurance policies you have to have. Sheesh! We spend a LOT in one month!

Now do the same calculation as you did before. Divide the money by the miles.

For example: Total Expenses =$5,400.00 (divide by) Total Miles 10,928
Divide the money by the miles and the result is .0494

So, for every mile you drove your truck you spend 49 cents. That is what it costs to operate your truck.

Knowing this number every month gives you powerful information. If your pay was $1.00 a mile, then .51 of that is yours free and clear, woo hoo!
If your pay was .48 a mile, well then, it's boo hoo!

Now that you know what it costs to run your truck it's easy to see how much your Net Profit is.

Net Profit is what's left after all expenses are accounted for. That's the number you need to know. Gross Pay looks a lot more impressive, but it tells you nothing. You could have a Gross Pay of $3,000.00 a week but if your expenses are $3,500.00 a week you aren't getting ahead. Knowing your numbers gives you power to change your future. Knowing your numbers gives you a map to success. If you don't know where you are, how do you know where you are going?

Calculating Net Profit. To find out our Cost Per Mile or Cents Per Mile to run, you added up all your expenses for a month then divided it by the miles driven for that month. To calculate Net Profit you need to gather all your settlements or invoices for that month and add up your Gross Income. Add up all the income you received for the month, including fuel surcharge.

Step 1
Subtract the Total Expenses for that month from your Gross Income. Hopefully your income number is a lot bigger than your expenses number!
This number is your Net Profit. To calculate CPM for Net Profit, divide the money by the miles, just like you did to find your cost per mile for expenses.

Example:
Your gross income for the month is $15,150.00 and you ran 11,578 miles that month. Divide $15,150.00 by 11,578. Your total is $1.31 (rounded up from $1.308). So for every mile your drove your truck you earned $1.31. That is your Gross Profit.

Step 2
To get your Net Profit, subtract your expenses CPM from your Gross Profit CPM

Example:
Your total expenses for the month were $5,097.00. Divide that by your total miles for the month, 11,578. Your Cost Per Mile to run is .44
Now subtract your expenses CPM from your gross profit CPM. $1.31 minus .44 = .87

So for every dollar you earned you kept 87 cents. Excellent!