Do you know what each kilometre really costs you? Many small transporters quote by feel and only find out at month end that a load lost money. Work out your cost per km once, keep it up to date, and you will always know your lowest price before you quote.
The formula
Cost per km = (fixed costs per month ÷ km per month) + running costs per km
Fixed costs are what the truck costs you even when it stands still. Running costs go up with every kilometre it drives. Work it out per truck, because a bakkie, a rigid and a horse and trailer each cost very different amounts.
How to work it out
1
Add up your fixed costs per month
- Finance or instalment: or depreciation if the truck is paid off
- Insurance
- Licence, permits and tracking
- Driver salary: if you pay a fixed monthly wage
- Overheads: this truck's share of office, admin and yard costs
2
Count your real kilometres per month
Use all the kilometres the truck drives, loaded and empty, from odometer readings or your tracker. Then divide your fixed costs by these kilometres. That is your fixed cost per km.
3
Work out your running costs per km
- Fuel: litres per 100 km × fuel price ÷ 100
- Tyres: price of a full set ÷ kilometres a set lasts
- Services and repairs: cost per year ÷ kilometres per year
- Tolls: per trip, or an average per km
- Driver pay: if you pay per km or per trip instead of a salary
4
Add them together
Fixed cost per km + running cost per km = your total cost per km. This is what every kilometre costs you, before any profit.
Worked example
A truck that drives 8,000 km a month. These are example numbers only. Use your own costs.
| Cost | Per month | Per km |
|---|---|---|
| Finance, insurance, licence, tracking | R30,000 | R3.75 |
| Driver salary | R16,000 | R2.00 |
| Overheads share | R6,000 | R0.75 |
| Fixed cost per km | R6.50 | |
| Fuel: 30 l/100 km × R22 a litre | R6.60 | |
| Tyres: R60,000 a set ÷ 150,000 km | R0.40 | |
| Services and repairs: R96,000 ÷ 96,000 km a year | R1.00 | |
| Running cost per km | R8.00 | |
| Total cost per km | R14.50 |
From cost per km to your rate
Your customer only pays for the loaded kilometres, so those kilometres must also pay for the empty ones.
- Cover the empty kilometres: if a third of all your kilometres are empty, each loaded kilometre must earn R14.50 × 1.5 = R21.75 just to break even
- Add your profit: with a 15% margin, R21.75 × 1.15 ≈ R25 per loaded km
- Let fuel move on its own: fuel is your biggest running cost and changes every month, so add a fuel surcharge to your rates instead of re-quoting every customer
Quick check: if a quote works out below your total cost per km, you lose money on every kilometre of that load.
Common mistakes
- Using planned kilometres: a truck that drives less than planned costs more per km, because the fixed costs are spread over fewer kilometres
- Leaving out empty kilometres: this is where most small transporters lose money without noticing
- Forgetting your own time and overheads: the office, phone and admin cost money too
- Never updating it: work it out again when fuel, insurance or finance changes, or at least every 3 months
How worxTMS helps
- Empty kilometres on every route: worxTMS measures from your depot to the first pickup and back from the last drop, so you see the full trip, not just the loaded part
- Rate sheets: set your rate per km for each customer and truck type on the Rates page
- Fuel surcharge: worked out for you from your fuel price, so your rates follow fuel
- Profit after fuel: see on each shipment whether the price covers the fuel for the whole trip
Frequently asked questions
Should I work out one cost per km for my whole fleet?
No. Work it out per truck, or at least per truck type. A bakkie and a horse and trailer have very different costs.
My truck is paid off. Do I still add finance?
Add depreciation instead: what the truck will need to be replaced, spread over its working life. Otherwise you cannot afford the next truck.
How often should I work it out again?
Whenever a big cost changes, such as fuel, insurance or finance, and at least every 3 months.
Why charge a fuel surcharge instead of a higher rate?
Fuel changes every month. A surcharge moves with it, so you do not lose money when fuel goes up, and your customer pays less when it comes down.
Related articles
- Step 1: Set up your company details: your depot is where every route starts
- Rates page: set your rate per km for each customer and truck type
- Fuel page: keep your fuel price up to date for the fuel surcharge
✓ Know your number before you quote
Work out your cost per km, set your rates on the Rates page, and let worxTMS show you the profit after fuel on every load.
Every kilometre has a cost. Make sure every load covers it.