Q I have been asked to provide and operate as an
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owner-driver a Ford D800 (costing altogether about £31100) with an insulated body. My work would be transporting one company's goods on a five-day week, 50-week year basis.
The payload will be 8 tons on outward journeys at all times, returning to base empty. This is mainly one drop per load, sometimes two.
My average weekly wage would be about £90, and average weekly mileage around 550.
What in your opinion do you think I can charge per mile, in addition to the basic wage, to obtain a fair return?
A The Commercial Motor Tables of
Operating Costs (adjusted to agree with the figures you have given) give the following weekly standing costs for a vehicle comparable with a Ford D800.
Licences 4.29 Wages 33.70 Rent and Rates 2.40 Insurance 5.47 Interest 7.60 53.46 a week or 9.80p per mile The interest figure has been calculated on 9 per cent per annum on the vehicle price you have quoted but based on a 45week year. This is the maximum time that you would be able to operate the vehicle taking into consideration maintenance, plating and testing, breakdowns, and so on, though you will have to charge for a 52-week year.
Running costs per mile are:—
Fuel 2.82 Lubricants 0.16 Tyres 1.40 Maintenance 3.05 Depreciation 2.30 9.73 per mile Total operating costs would, therefore, be standing cost per mile plus running cost per mile = 19.53p.
Fuel costs have been estimated on the basis of 10 mpg with fuel costing 31p a gallon. Tyre costs have been calculated on a tyre price of £350 for a set of seven tyres with an estimated life of 25000 miles. Maintenance has been calculated on average figures supplied by a number of operators. Depreciation shown is the price of' the vehicle (less tyres) divided by the estimated life (six years at 25,000 miles a year) expressed in miles.
To the total operating costs should be added a 20 per cent appropriation for establishment costs, that is lighting, heating, postage, telephones and so on. This gives a figure of 23.43 (19.53 + 3.90p) to which must be added another 20 per cent for profit and contingency giving 28.08 (23.45 + 4.65) which is the total operating charge per mile for the mileage you quote.
Assuming that the 550 miles you mention includes the empty running, the total charge you should make is 28.08 X 550 £154.44. You say that the basic pay is £90 per week so this leaves £64.44 to recover in order that you will make a reasonable profit. Expressed in terms of pence per mile this is £64.44 ± 550 = 11.71p or 12p in round figures.
You must understand, however, that some of the cost factors have been estimated and might vary considerably from those which you actually incur. You should substitute actual figures and recalculate wherever you are able to do so.