Fixed vs. Variable Costs in Hotshot Trucking

What counts as a fixed cost?

Truck and trailer financing or lease payments, insurance premiums, software subscriptions and recurring permits may continue even in a slow month. Some costs are semi-fixed or change at renewal; use your actual bills rather than a generic industry average.

Fixed costs are not automatically deductible in the same way for tax purposes. A cash budget, an accounting profit statement and a tax return answer different questions.

What counts as a variable cost?

Fuel, DEF, tires, maintenance reserves, tolls and mileage-dependent wear typically increase with use. Some dispatch charges are percentages of revenue rather than mileage costs; model them separately to avoid hiding their effect.

Separate routine operating reserves from one-time capital purchases. A reserve is a budgeting allowance, not proof that cash was spent.

Worked example: monthly operating cost per mile

Assume $2,400 in fixed monthly operating costs, $0.68 in variable cost per total mile, and 6,000 total miles. Fixed cost per mile is $2,400 ÷ 6,000 = $0.40. Combined operating cost per mile is $0.40 + $0.68 = $1.08.

If total mileage falls to 4,000 with the same fixed bills, fixed cost rises to $0.60 per mile and combined cost to $1.28. The same truck can have a different break-even rate at different utilization levels.

These are hypothetical figures, not market benchmarks. Owner compensation, taxes, debt principal accounting and target business profit must be addressed separately.

Avoid double-counting

Do not include a full maintenance invoice and the same maintenance reserve as two actual expenses. Use the reserve for forward pricing, then reconcile it against real spending.

Do not count dispatch fees twice: if you deduct a percentage of gross revenue when quoting, do not also bury that percentage in the operating cost-per-mile input.

Practical monthly review

Update fixed bills, fuel efficiency, diesel price, actual total miles and maintenance spending. Compare planned cost per mile against realized costs after delivery. Review low-mileage months separately.