How Much Do Owner Operators Make After Expenses?

How much does an owner-operator make after all expenses and deductions? Here is an analysis of average returns.

For an aspiring owner-operator, one of the main things that are likely to be of interest is the profit potential of such a business. However, the real profit is only calculated after subtracting all operational expenditures.

In this article, we’ll be helping you to figure out how much profits you’re likely to earn after expenses.

Owner Operator Expense Breakdown

One of the most difficult things for newbies is knowing exactly what constitutes expenditure. These are things that take out money. Such may include recurring or one-time expenses.

Whatever the case is, you’ll need to have details on these to help you determine just how much income owner-operators make.

  • Expenses Influence Earnings

One of the main reasons why you need to figure out all your expenses is the fact that it ends up influencing your earnings. While a lot of people erroneously think they only have to increase their clientele or output to increase earnings, it isn’t entirely true.

By cutting down on cost or expenses, it directly impacts or increases your take-home cash earnings. As such, cost management is very vital for every owner-operator business.

  • Fixed And Variable Costs

To have an understanding of how much owner-operators earn, it’s important to ensure the concept of cost is thoroughly understood. Now, the cost is made up of two main types; fixed and variable.

As the names suggest, one is constant (fixed) while the other changes.

i. Fixed Expenses

These are unchanging and remain constant month after month. With such costs, you’ll still incur them during times when there’s no load. They include vehicle monthly payments, fixed annual fees, vehicle permits or registrations, and cellphone contracts or CB radio.

Others include garage or parking expenses, insurance, and accounting or legal services. All of these are expenses your owner-operator business attracts and must be paid. Only after subtracting such expenses (including variable) are you left with your real earnings.

ii. Variable Expenses

Variable expenses or costs are changing and may increase based on unfolding realities. They include those relating to food and drinks, maintenance and repairs, fuel, dispatcher or broker fees, tires, truck washes, lodging and miscellaneous. You only get to know how much your real earnings are after subtracting these (both fixed and variable) costs.

Always Calculate Your Break-Even Miles Point

If you need to know the exact amount owner-operators make, you’ll need to frequently calculate your breakeven miles point. Now, this may sound like jargon to some readers. If it does, don’t worry as we’ll explain shortly.

We’ll also show you just how to calculate the break-even miles point.

First off, what does break even miles point mean? It simply refers to a situation where your owner-operator business no net income or losses. In other words, (using chess terminology) a stalemate results. At this point, any drop below this point translates to losses for the business.

The break-even miles point will need to be calculated frequently due to price changes in expenditure. Doing so takes into account such changes and reflects the true state of the business. It gives you the exact amount you must have earned after expenses.

In calculating the break-even miles point, you’ll need to add 5 major components. These include operating costs, fuel costs, driver labor costs, and load specific costs.

Obtaining The Net Income

When seeking for the amount an owner-operator makes after expenses, the net income provides this answer. Here, the total expenses of the business are subtracted from the gross income. This is exclusive of taxes.

The reason is simple! The amount paid in taxes varies from state to state.

Improving On Your Net Income

One of the key ways to increase earnings from your owner operator business is by organizing your entire expenses. This gives you a better picture of what cost to cut down. Such costs aren’t essential and can be avoided.

That way, more money is freed up that ultimately ends in your pocket at the end of the day.

Being able to trace every dollar, no matter how insignificant it may seem eventually adds up. You should consider doing this as frequently as necessary. There are seasonal differences in earnings too! The influence of seasons on earnings will directly impact on your monthly earnings.

Taking a broader view of your annual earnings provides a better framework to help further cut down on expenses.

How Much Owner Operators Make After Expenses

There are lots of variables involved when it comes to calculating earnings for owner-operator businesses. Despite this fact, there’s a figure and it’s an average. Owner-operators earn an average salary of $220,591.

Tips On Improving Earnings For Owner Operators

Having discussed the different factors influencing earnings, it’s necessary to provide you with tips on how to improve your earnings as an owner-operator. Every business seeks growth and one of the ways growth is measured is by a rise in earnings.

Things you should consider doing include avoiding unnecessary spending. There are times when entrepreneurs commit resources to aspects of their businesses that have no real impact on growth. These should be stopped.

Limiting your downtime is also necessary to ensure a steady flow of contracts and income.

Consider working closely with dispatchers to find better loads. Also, an investment in equipment is great to improve efficiency. Doing this makes you better equipped to handle bigger jobs which results in more pay. Limiting empty return loads will help greatly.

Fuel efficiency is highly important. You want to ensure your truck(s) are fuel-efficient. The more fuel-efficient such vehicles are, the less they take up your income.

All our discussions to this point have been focused on providing the right answer to the question of the amount earned by owner-operators after expenses. We’ve mentioned what these expenses look like and have also provided ways on how to limit them.

As an owner-operator, you have greater control over your earning potentials.