In this guide
- The Basic Rate Per Mile Formulas
- Worked Example: Is This Load Profitable?
- How to Calculate a Carrier's Cost Per Mile
- Putting It Together: Profit on the Load
- How to Find the Minimum Rate You Should Accept
- Comparing Two Loads: Higher Rate Is Not Always Better
- Other Factors to Consider Before Booking
- Frequently Asked Questions
Rate per mile (RPM) is the number dispatchers use to compare loads quickly. To calculate it, divide the total rate by the number of miles. The key is which miles you use: a load that looks excellent on loaded miles alone can be average, or even unprofitable, once you add the empty miles to reach the pickup and the carrier's real costs. This guide shows the formulas, a full worked example and a simple way to decide whether to book a load.
Key takeaways
- Posted RPM = rate ÷ loaded miles. All-miles RPM = rate ÷ (loaded miles + deadhead miles).
- Compare loads on all-miles RPM, then check profit against the carrier's cost per mile.
- Cost per mile combines fixed costs (truck payment, insurance) and variable costs (fuel, maintenance, driver pay).
- Percentage fees such as dispatch and factoring must be included when you work out the minimum acceptable rate.
The Basic Rate Per Mile Formulas
| Measure | Formula | What it tells you |
|---|---|---|
| Posted RPM | Total rate ÷ loaded miles | How the broker's offer looks on paper |
| All-miles RPM | Total rate ÷ (loaded miles + deadhead miles) | What the truck really earns for every mile it drives |
| Cost per mile (CPM) | Total costs ÷ total miles driven | What each mile costs the carrier |
| Profit per mile | All-miles RPM − CPM − fees per mile | What the carrier keeps from each mile |
Deadhead is the distance a truck drives empty, usually from the last delivery to the next pickup. The truck still burns fuel and uses driver hours on those miles, so ignoring deadhead makes loads look better than they are.
Worked Example: Is This Load Profitable?
A broker offers a dry van load paying $2,600 for 781 loaded miles. The truck is 120 miles from the pickup.
- Posted RPM: $2,600 ÷ 781 = $3.33 per mile
- Total miles: 781 + 120 = 901 miles
- All-miles RPM: $2,600 ÷ 901 = $2.89 per mile
The load looks like $3.33 a mile but really pays $2.89 for every mile the truck drives. To know whether that is good, we need the carrier's costs.
How to Calculate a Carrier's Cost Per Mile
Every carrier's numbers are different, so always use real figures from the carrier. The example below uses illustrative numbers for one owner-operator to show the method.
Fixed costs (paid every month, whether the truck moves or not)
| Fixed cost | Per month (example) |
|---|---|
| Truck payment | $2,500 |
| Trailer payment | $700 |
| Insurance | $1,400 |
| Permits, ELD, phone, software and parking | $300 |
| Total fixed costs | $4,900 |
If the truck runs about 10,000 miles a month, fixed cost per mile = $4,900 ÷ 10,000 = $0.49.
Variable costs (rise with every mile)
| Variable cost | Per mile (example) | How it is calculated |
|---|---|---|
| Fuel | $0.58 | Diesel at $3.80 per gallon ÷ 6.5 miles per gallon |
| Maintenance and tires | $0.20 | Based on the carrier's repair and tire history |
| Tolls and miscellaneous | $0.03 | Average across typical lanes |
| Total variable costs | $0.81 |
Operating cost per mile = $0.49 fixed + $0.81 variable = $1.30. The driver (or owner-operator) also needs to be paid. If the driver pay target is $0.65 per mile, the total cost per mile becomes $1.95.
Putting It Together: Profit on the Load
| Item | Calculation | Amount |
|---|---|---|
| Revenue | Agreed rate | $2,600.00 |
| Trip costs | 901 miles × $1.95 | −$1,756.95 |
| Dispatch fee | 8% of $2,600 | −$208.00 |
| Factoring fee | 3% of $2,600 | −$78.00 |
| Profit after driver pay | $557.05 |
This load is profitable for this carrier. With different costs, more deadhead or a weaker reload market, the answer could change.
How to Find the Minimum Rate You Should Accept
Because dispatch and factoring fees are percentages of the rate, you cannot simply add them to costs. Use this formula:
Break-even rate = (total miles × cost per mile) ÷ (1 − total percentage fees)
For our example: (901 × $1.95) ÷ (1 − 0.11) = $1,756.95 ÷ 0.89 = $1,974, or about $2.53 per loaded mile. Anything below this loses money.
Carriers also need profit, not just break-even. If the carrier wants an extra $0.30 per mile of profit on all miles:
(901 × $2.25) ÷ 0.89 = $2,278, or about $2.92 per loaded mile.
That number becomes your walk-away point in negotiation. See how to negotiate freight rates with brokers for how to use it on the call.
Comparing Two Loads: Higher Rate Is Not Always Better
| Load A | Load B | |
|---|---|---|
| Rate | $2,600 | $1,900 |
| Loaded miles / deadhead | 781 / 120 | 520 / 25 |
| Posted RPM | $3.33 | $3.65 |
| All-miles RPM | $2.89 | $3.49 |
| Trip costs at $1.95 per mile | $1,756.95 | $1,062.75 |
| Fees at 11% | $286.00 | $209.00 |
| Profit | $557.05 | $628.25 |
Load B pays $700 less but earns more profit, uses fewer driver hours and frees the truck sooner for its next load. This is why experienced dispatchers compare loads on all-miles RPM and profit, not on the headline rate.
Other Factors to Consider Before Booking
- Time on the load. A load with long waits or a delivery two days away ties up the truck. Consider revenue per day, not only per mile.
- The reload market. Check outbound loads and rates from the destination. A great rate into a weak market may be followed by a long deadhead.
- Short loads. Short trips often show a high RPM but involve more time loading and unloading relative to driving.
- Accessorials. Detention, extra stops and lumper fees change the true value of a load. Get them on the rate confirmation.
- Broker payment terms. A slightly higher rate from a broker who pays slowly or has poor credit can be the worse choice.
- Fuel price changes. Recalculate fuel cost per mile when diesel prices move significantly.
Dispatcher tip
Keep a simple spreadsheet with columns for rate, loaded miles, deadhead, all-miles RPM, broker and days to pay. After a few weeks you will see which lanes and brokers genuinely make the carrier money.
Learn to evaluate loads like a professionalOur training covers lane analysis, load boards and rate negotiation with practical examples.
Explore the CourseFrequently Asked Questions
Should I include deadhead miles in rate per mile?
Yes, when deciding whether a load is worth booking. Posted RPM is useful for comparing with market averages, but all-miles RPM shows what the truck actually earns for the distance it drives.
What is a good cost per mile for an owner-operator?
There is no universal figure. Cost per mile depends on the truck's age and payment, insurance, fuel prices, maintenance and miles driven each month. Always calculate it from the carrier's own records.
Does the rate per mile include fuel surcharge?
Spot market rates from brokers are usually quoted as a single all-in amount. Some contract rates separate the linehaul rate and a fuel surcharge. Make sure you compare like with like.
Why do short loads often have a higher rate per mile?
Short loads involve pickup and delivery time that does not change much with distance. Brokers pay more per mile so the trip is still worthwhile for the carrier.
