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Knowledgebase: Prices
An example calculation on working out your bottom line price per mile
Posted by - NA - on 13 August 2008 12:46 PM
Disclaimer: This is mearly a guide on how to calculate a price per mile figure!

An example calculation for working out the bottom line price per mile.

Firstly, you will need to work out what costs you have over a year... what you put into this is up to you, it is better to be accurate with what you select.
[TIP: Be prudent and put in as much as you possibly can! You would just be cheating yourself if you didn't]

Examples of this would be:
Income tax, V.A.T.*, insurance costs, servicing, road tax / mot, vehicle depreciation, vehicle payments, accountants fees, mobile fees, CX membership, stationary etc...
Only you will know what the full list would be... you may wish to include a salary / profit figure that your aiming for for the year....

On top of this you will need to include your fuel costs for the year as well ..... however, to do this you will need to make an assumption as to how many miles you will be doing in the course of a year. On average this will be approximately 60,000 total miles during the course of a year. This is of course variable, but is a good staring point

  • To calculate fuel costs using this figure you will also need to know the price per galleon of fuel.
[TIP:1 litre is approximately 0.22 gallons..... or 1 gallon is approximately 4.56 litres]

  • You will also need to work out the fuel efficiency of your vehicle.... and work out the miles per gallon of your vehicle
Measure the distance your vehicle has travelled and the amount of fuel you have used to cover this distance.

[TIP: Fill your tank completely to the top, drive a certain amount of miles on the roads / speeds that you would usually use, measure the mileage using your trip meter. Fill your vehicle tank completely to the top and record the amount of litres you enter into your tank on the second fill up]

Using these figures you should then be able to calculate your miles per litre... i.e miles covered / litres used. (mpl)
You should also be able to work out the miles per gallon, i.e. miles covered / [litres used * 0.22] this should give you a miles per galleon figure.

Finally the calculation for fuel cost per year:

miles per year / mpg figure = gallons used per year.
no of gallons * 4.56 = litres used per year.
Litres per year * cost per litre = total fuel cost for the year.

Easier though instead of converting to gallons and back again simply use the miles per litre figure you calculated earlier....

Miles per year (60,000) / miles per litre = total litres used per year.
Litres used * price per litre = Total Fuel Cost for the year.

Now you have this fuel cost figure add this to the other costs to give you your total costs for the year.

Now divide by the total chargeable miles you will do throughout the year,
[TIP: When calculating this assume that you will not get any return loads and you will be returning empty, this will also mean that any return journeys you do receive are extra income added to your bottom line and not required on every job]

Out of the 60,000 miles you will probably be doing approx 27-28,000 chargeable miles.
So your final price per mile calculation would be....

Total Costs / chargeable miles (28,000) = basic price per mile rate.

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