Break-Even Analysis
Calculate how many miles you need to drive each month to cover all fixed and variable costs and start earning profit.
Results
Visualization
How It Works
Break-even analysis tells you the minimum miles you must drive each month just to cover all your costs. Every mile beyond break-even is profit. This is one of the most important numbers for any owner-operator to know, because it determines how much home time you can afford and how selective you can be with loads.
The Formula
Worked Example
With $5,500 in monthly fixed costs, $0.75 variable cost per mile, and $2.10 revenue per mile, your contribution margin is $1.35/mile. Break-even = $5,500 / $1.35 = 4,074 miles. After that, every mile earns you $1.35 profit.
Practical Tips
- Know your break-even number by heart. It is the most important figure in your business.
- Lower fixed costs (refinance, shop for insurance) to reduce your break-even miles and increase flexibility.
- Improving fuel efficiency even slightly has a big impact since it lowers your variable cost per mile across all miles driven.
- Plan to exceed break-even by at least 40-50% to build reserves for slow months and major repairs.
- Recalculate your break-even whenever a major expense changes (new insurance rate, truck paid off, etc.).
Frequently Asked Questions
What fixed costs should I include?
Include truck payment, insurance (liability, physical damage, cargo, bobtail), permits (IRP, IFTA, UCR, highway use tax), ELD subscription, parking, phone/internet, and any other costs that do not change with miles driven.
What is contribution margin?
Contribution margin is what each mile contributes toward covering fixed costs and generating profit. It equals revenue per mile minus variable cost per mile. A higher contribution margin means you break even faster.
How many miles should I plan to drive per month?
Solo owner-operators typically target 8,000-11,000 miles per month. Your break-even number tells you the minimum. Aim for at least 4,000-5,000 miles above break-even for a reasonable income.
What happens if my variable cost exceeds my revenue per mile?
If variable cost per mile is higher than revenue per mile, you lose money on every mile driven. You need to either increase your rates, reduce variable costs, or you should not be operating until you can fix the economics.
How does home time affect break-even?
More home time means fewer revenue miles, but your fixed costs stay the same. If break-even is 4,074 miles and you only drive 20 days at 450 miles/day, you get 9,000 miles. Taking an extra week off drops you to 6,750 miles, still above break-even but with less profit.