What your truck actually costs, per mile and per job

The decisions this number actually changes

Cost per mile is not a bookkeeping exercise. It settles four arguments that service businesses have constantly.

How far to travel. With a real per-mile number, the service radius stops being a feeling. At $1.02 per mile, a job 35 miles away carries $71.40 of vehicle cost round trip, plus roughly 90 minutes of paid time. That is either priced into a travel charge or it is a subsidy.

Whether to add a truck or route better. A second vehicle costs $22,507 a year before a single additional job. Improving route density to add one job per day per existing truck usually costs nothing and produces more.

Buy, lease, or buy used. The comparison is meaningless without depreciation in the model, which is exactly why most owners compare a lease payment to a loan payment and reach the wrong conclusion.

What to charge for a trip fee. If a diagnostic call has $40 of vehicle cost and 75 minutes of labor, a $69 trip fee is not a revenue item — it is a partial refund of your own money.

Buying the next truck: the four comparisons that matter

Most vehicle purchase decisions in small service businesses are made on the monthly payment and the salesperson's availability. Four comparisons produce a better answer, and all of them require the total cost model above rather than the payment.

New versus three-year-old. A three-year-old work van has absorbed the steepest part of depreciation and typically costs 35% to 50% less to buy, while carrying higher maintenance and repair reserves and a shorter remaining life. Run both through the same five-year model. In many markets the used van wins on total cost per mile, and the gap narrows considerably when downtime is valued honestly — a vehicle in the shop is a technician not producing.

Buy versus lease. A lease converts depreciation into a predictable payment and usually keeps the vehicle under warranty for its whole term, which suits companies that want fixed costs and no disposal risk. Buying wins when the vehicle will be kept well past the point where it is paid off, which is common in trades where a van does 12 to 15 years. Mileage limits are the variable that decides most of these: a service business doing 22,000 miles a year needs to check that the lease terms match reality, because overage charges destroy the comparison.

Size and configuration. The temptation is to buy larger than needed. A bigger van costs more to buy, more per mile in fuel, more in insurance, and often cannot access the parking and driveways the work actually requires. The right question is what the current job mix demands, not what the largest job of last year demanded.

Upfit now or later. Shelving, bin systems, ladder racks and power take time and money, but an unorganized van is a permanent tax on every job — technicians looking for parts, returning to the shop, and carrying inventory they cannot find. Budget the upfit as part of the vehicle purchase rather than as a later discretionary expense, because it never gets done later.

When one truck becomes a fleet

Everything above scales, but three things change once you have three or more vehicles, and each one is a place where money leaks quietly.

Fuel spend stops being verifiable. With one truck the owner knows what is normal. With four, fuel becomes a number on a statement. Fuel cards with per-vehicle tracking, and a simple monthly review of gallons per mile by vehicle, catch both mechanical problems and personal use before they become large.

Maintenance stops happening. Nobody owns it. Scheduled service by mileage, tracked per vehicle with a named person responsible, costs a few hundred dollars a year and prevents the roadside failure that costs a full day of revenue plus an emergency repair.

Replacement timing becomes a strategy. Replacing all vehicles at once is a capital event that hurts. Staggering purchases so one vehicle turns over each year smooths cash flow and keeps the average fleet age stable.

There is also a decision worth revisiting annually: vehicle allowance or reimbursement instead of company vehicles. Having technicians use personal vehicles with mileage reimbursement removes capital and maintenance burden, but it also removes branding, control over vehicle condition, and the ability to stock the truck properly — and it carries insurance and tax implications that need an accountant's input rather than a forum's.

The rules that keep the truck from becoming a liability

A written vehicle policy is one page and prevents five expensive problems. It needs to answer:

1. Who may drive, and what happens after a moving violation or an accident. Driving records should be checked before someone is handed keys, and rechecked periodically.
2. Whether personal use is allowed, and if so, when and how far. Take-home vehicles have real tax consequences that vary — this is a question for your accountant, not for guessing.
3. What is required daily: fuel level, walk-around check, ladder and rack security, and a clean cab and body, because a filthy truck is the customer's first impression.
4. What to do at an accident, in a specific sequence, printed and kept in the glovebox.
5. Who is responsible for tools left in the vehicle, and what the overnight rules are. Tool theft from work vehicles is a routine loss and it is largely preventable.

Insurance deserves a specific note: a personal auto policy generally does not cover business use, and discovering that during a claim is catastrophic. Any vehicle used for the business needs commercial coverage, and any employee driving it needs to be covered by name or by class under that policy.

Putting the truck into your hourly rate

The whole exercise is pointless if the number never reaches the price. There are two ways to load vehicle cost into what you charge, and the choice depends on how your work is structured.

Load it into the hourly rate. Take the annual vehicle cost, divide by the billable hours that vehicle supports in a year, and add the result to your rate. If the van costs $22,507 and supports 1,300 billable hours, that is $17.31 per billable hour that has to be in the rate before labor, overhead and profit. Companies that skip this step and then wonder why a healthy-looking hourly rate produces no profit have usually found the reason right here.

Charge it separately as a trip or service call fee. This works better when jobs are short and travel is a large share of the day. The fee should cover the round-trip vehicle cost plus the travel time, which for most residential service work lands somewhere between $65 and $120 — and it should be disclosed on the phone, not on the invoice.

Whichever method you use, one rule applies: do not do both halfway. Loading part of the cost into the rate and part into a fee, without knowing which part went where, is how companies end up unable to explain their own pricing to a customer who asks.

The whole thing on one company

A plumbing company with three vans, running 2,900 jobs a year.

Total annual vehicle cost, all three vehicles with depreciation included: $64,900. That is $22.38 per job. Their previously assumed number, counting only payments, fuel and insurance, was $11.90.

The gap of $10.48 per job across 2,900 jobs is $30,392 a year of cost that was never in any price. On revenue of $1.31 million, that is 2.3 points of margin that the company believed it had and did not.

What changed after they measured it: a $12 increase in the standard service call price covering most of the gap, a travel surcharge beyond 25 miles, a replacement fund funded monthly, and a decision to postpone a fourth van in favor of tightening routing — which added an average of 0.8 jobs per truck per day.

Net effect in the following year: $41,600 more gross profit, of which roughly a third came from pricing correction and two thirds from not buying a truck the company thought it needed.

Five numbers to track

• Cost per mile per vehicle, recalculated annually with actual figures.
• Cost per completed job attributable to vehicles.
• Miles per completed job, which is the routing efficiency indicator.
• Fuel efficiency by vehicle, monthly — a sudden change is usually mechanical.
• Replacement fund balance against remaining vehicle life.

The truck is the second-largest line in most service businesses and the one most often estimated instead of measured. Half an hour with real numbers usually reveals that jobs are priced against a vehicle cost that was invented — and that the next truck the company was about to buy is not actually needed.

Frequently asked questions

How do I calculate what my work truck costs per mile?

Add eight annual figures and divide by annual miles. Depreciation, which is purchase price minus expected resale spread over the years you will keep it; interest on the financed portion; commercial insurance; fuel; maintenance and tires averaged rather than taken from one year; a repair reserve; registration, inspection, tolls and parking; and amortization of the upfit such as shelving, bins and ladder racks. On a $52,000 van driven 22,000 miles a year and sold at $18,000 after five years, that totals about $22,507 annually — $1.02 per mile, or $93.78 per working day across 240 days. If that van completes three jobs a day, the vehicle alone costs $31.26 per job before anyone is paid, and a 40-mile round trip carries $40.80 of true vehicle cost.

Is a paid-off work truck free to operate?

No, and treating it that way is the most common financial mistake in service businesses. A vehicle with no payment still burns fuel, still needs tires and brakes, still costs commercial insurance and registration, and still loses value every year. Depreciation is usually the largest single component of vehicle cost and the only one that never arrives as a bill — a $52,000 van sold at $18,000 after five years has consumed $34,000, which is $567 a month, frequently more than the loan payment was. Companies that price jobs as though a paid-off truck is free underprice systematically, and then face the replacement with no cash set aside. The fix is to reserve the depreciation figure monthly in a separate account from day one.

How do I include vehicle cost in my hourly rate?

Two methods, and the choice depends on how your work is structured. Load it into the rate by taking annual vehicle cost and dividing by the billable hours that vehicle supports: a van costing $22,507 across 1,300 billable hours adds $17.31 per billable hour that must be in the rate before labor, overhead and profit. Or charge it separately as a trip or service call fee, which works better when jobs are short and travel is a large share of the day — the fee should cover round-trip vehicle cost plus travel time, typically landing between $65 and $120 for residential service work, and it should be disclosed on the phone rather than appearing on the invoice. The one rule that matters is not doing both halfway, which leaves you unable to explain your own pricing.

Should I buy or lease a work van?

Run both through the same total-cost model rather than comparing payments. A lease converts depreciation into a predictable payment and usually keeps the vehicle under warranty for its term, which suits companies wanting fixed costs and no disposal risk. Buying wins when the vehicle will be kept well past payoff, which is common in trades where a van runs 12 to 15 years. Mileage limits decide most of these comparisons: a service business doing 22,000 miles a year must confirm the lease terms match reality, because overage charges invalidate the math. A third option worth modeling is a three-year-old van, which has absorbed the steepest depreciation and typically costs 35% to 50% less to buy, at the price of higher repair reserves and more downtime — and downtime is a technician not producing.

What changes when a service business goes from one truck to several?

Three things start leaking money quietly. Fuel spend stops being verifiable, because with one truck the owner knows what is normal and with four it becomes a line on a statement — fuel cards with per-vehicle tracking and a monthly review of gallons per mile catch both mechanical problems and personal use early. Maintenance stops happening, because nobody owns it, so scheduled service by mileage with a named person responsible costs a few hundred dollars a year and prevents the roadside failure that costs a full day of revenue plus an emergency repair. And replacement timing becomes a strategy: staggering purchases so one vehicle turns over each year smooths cash flow and keeps average fleet age stable, instead of facing a single painful capital event.