Costs
Cost per kilometer: how to calculate a number you can actually use
Cost per kilometer is the number you quote with, compare with and retire vehicles with. Almost every fleet calculates it; very few calculate it completely, which is how they end up quoting below cost without knowing.
· 7 min read · Costs
The formula, and why the formula is not the problem
Cost per kilometer is total costs for a period divided by kilometers driven in that same period. That is all. The difficulty is not the division, it is what goes into the numerator.
Most calculations in circulation include only fuel and corrective repairs, the visible items. They leave out depreciation, insurance, documents, downtime and administration, which in a mid-size fleet can be half of the real cost.
What belongs in the numerator
A cost per kilometer without the fixed column is not a cost, it is an optimistic estimate.
| Type | Item | How it is allocated |
|---|---|---|
| Variable | Fuel | Direct per vehicle |
| Variable | Tires | Per kilometer of estimated life |
| Variable | Preventive and corrective maintenance | Direct per vehicle |
| Variable | Tolls | Direct per route |
| Fixed | Vehicle depreciation | Monthly, per vehicle |
| Fixed | Insurance | Monthly, per vehicle |
| Fixed | Taxes and mandatory inspections | Annual, prorated monthly |
| Fixed | Driver salary | Monthly, per assigned vehicle |
| Fixed | Yard and administration | Prorated across the fleet |
How to build it without a project
Pick a period and keep it
A calendar month works well. What matters is that kilometers and costs cover exactly the same window, otherwise the number is distorted.
Get reliable kilometers
Odometer at the start and end of the month, per vehicle. If the reading is estimated, the whole calculation inherits that error and there is no way to spot it later.
Compute per vehicle before per fleet
The fleet average hides exactly what you are looking for: the vehicle costing twice what its peers cost, which should probably have been retired already.
Recalculate monthly and keep the series
A single cost per kilometer says nothing. Twelve consecutive months show trend, seasonality and the exact month a vehicle started to deteriorate.
Frequently asked questions
How often should cost per kilometer be recalculated?
Monthly. Less frequently and you lose the early signals that a vehicle is deteriorating, which is the most profitable use of the indicator.
Should driver salary be included?
If you use the number to quote services, yes: the cost of operating includes the operator. If you use it only to compare vehicles against each other, you can leave it out as long as you are consistent.
Is it useful to benchmark against another company?
Not very, because almost nobody includes the same items. Comparing your own vehicles against each other and your own month-to-month series is far more useful.
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