Looked at this way, it’s easy to see why you should be eliminating as many costs as possible. But because costs eat up around 95% of your revenue, making that small improvement is the equivalent of adding $50,000 in revenue to your business! It doesn’t seem like much, considering you may be spending $50,000 on fuel a year. Let’s say that with different driving techniques, you improve your gas mileage by just a half-mile a gallon, and this results in your saving $2,500 on fuel throughout the year. Let’s look at the other way to increase profit: reducing expenses. So on average, that new gig only results in $2,500 profit for you. Let’s say you get a big new job and it pays you $50,000 throughout the year: 5% of that is $2,500. There are two ways to add to your profit (i.e., your take-home pay). The other 95% of that revenue will generally go towards your costs: your fuel, your truck payments and maintenance, your food and drink, your insurance, your permits, etc. What does that mean? It means that for every $20 in gross revenue you make, you are only making $1 in profit. Your average independent owner-operator works at a 5% profit margin-not including salary. This article will help you better understand how the Income Estimator works. It’s a tool you can use to plug in estimates of your business income and expenses to see how much you can expect to make, and how changing your various business costs impacts your bottom line. On the Rigbooks site, one of our most popular resources is the Owner-Operator Income Estimation calculator. Experienced owner-operators who want to revisit their budgets and streamline their costs should also find it helpful. This article will probably be most helpful to you if you’re brainstorming getting into the business. In this article, I’ll give you a quick explanation for why cost-reduction is so important, and then a rundown of what the most common expenses are and how you might estimate how much they’ll cost you. So you need to understand your business costs as much as possible and to then decrease those costs as much as you can. To put that in simple language: it’s tough to make money because you have to pay out almost as you have coming in. Understanding owner-operator expenses and costsīeing an independent owner-operator or a small commercial truck fleet owner is a small profit margin business.
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