Calculating delivery costs on a per-mile basis is essential for businesses that rely on shipping products to customers and want to maintain profitability. There are various factors involved in determining these costs, including distance, fuel prices, and vehicle maintenance. In this article, we will discuss the steps needed to calculate delivery cost per mile.

Step 1: Determine the Distance

The first step in calculating delivery cost per mile is determining the distance between the point of origin and the delivery destination. You can use mapping services like Google Maps or professional mileage calculators.

Step 2: Calculate Fuel Cost

To determine the cost of fuel for your delivery, you must know your vehicle’s fuel efficiency and current fuel prices. Fuel efficiency can be found in your vehicle’s owner manual or by searching online. Once you have this information, you can calculate the total fuel cost as follows:

Total Fuel Cost = (Distance / Vehicle’s Miles per Gallon) * Price per Gallon

Step 3: Account for Maintenance and Depreciation Costs

Besides fuel costs, vehicle maintenance and depreciation should also be factored into the delivery cost. Maintenance expenses vary depending on the type of vehicle, usage patterns, and regular upkeep.

For a rough estimation of these costs:

– Find the average of annual maintenance expenses for your vehicle.

– Divide this amount by your annual mileage to obtain a cost per mile.

– Add this amount to your total calculation.

You should also consider depreciation costs since vehicles lose value over time:

– Research online or consult a professional to determine your vehicle’s expected depreciation rate.

– Find out how much value your car loses each year by dividing its purchase price by its lifetime (number of years).

– Divide that by yearly mileage to get the depreciation cost per mile.

– Add this amount to your calculation.

Step 4: Factor in Labor Costs

Don’t forget to account for labor costs, such as driver’s salary and benefits. Simply calculate an hourly wage and divide it by the estimated number of miles driven per hour. Add this to the other costs mentioned above.

Step 5: Calculate Your Delivery Cost Per Mile

Now, add all the costs (fuel, maintenance, depreciation, labor) you have calculated so far and divide the total cost by the number of miles driven to get your delivery cost per mile.

Example: If your fuel cost is $0.15 per mile, maintenance cost is $0.08 per mile, depreciation cost is $0.04 per mile, and labor cost is $0.20 per mile:

Delivery Cost Per Mile = ($0.15 + $0.08 + $0.04 + $0.20) = $0.47 per mile

Conclusion:

Understanding and calculating your delivery cost per mile can help you maintain profitability within your business by allowing you to make informed decisions regarding shipping options or delivery fees charged to customers. Remember to consistently update your calculations as fuel prices, vehicle expenses, or other factors change over time.