The total cost of ownership is a comprehensive topic that one must understand in order to manage a fleet. As a small business/fleet owner, you have a lot of things on your plate to juggle to make sure customers are taken care of. While that is an essential part of being a business owner, making money is also. For many fleet owners, calculating the total cost of ownership takes a backseat, which could be costing you lots of money. Here’s how you can calculate your total cost of ownership.
Where To Begin Breaking Down Your Costs?
Fleet expenses are broken down into fixed and variable costs. Fixed expenses include things like depreciation, insurance and permits, loan or lease payments, licenses, taxes, and upfitting. These costs are typically pre-determined regardless of how much you use a particular vehicle.
Variable expenses include things like parts replacements, toll bills, maintenance, and fuel. These are variable because you can’t usually predict what the cost will be in any given month. Of course, you could estimate these values, but you won’t know the actual monthly cost until the month has concluded.
What Is The Typical Largest Cost For Fleet Owners?
Most of the time the largest cost for fleet owners is depreciation. This factors for about 38% of the overall costs, with the next closest cost being fuel at about 26%. Maintenance costs often receive a lot of attention as being a high cost, but it usually only comes to about 10% of the overall cost.
Average Annual Maintenance Costs And Fuel Costs
The national average cost for annual maintenance for an asset is roughly $2,600. The type of maintenance associated with this average includes routine preventive maintenance and includes buses, vehicles, trucks, and heavy equipment. At DeBoer’s Auto, we estimate annual maintenance for our customers to be closer to $2,000.
The national average for the cost of fuel is roughly $5,700. This includes a range of Class 1-6 trucks and vans. While the price of gas can fluctuate often, this number gives you an idea of how much money you might spend on fuel every year.
Understanding total cost of ownership is an important part of being a fleet owner. In part two of our three-part series on fleet ownership, we will discuss how to calculate your cost per mile for each vehicle in your fleet. If you have any questions or thoughts about total cost of ownership, don’t hesitate to reach out to us at DeBoer’s Auto and we would be happy to help.