Now you can use your cost per kilometre. This lesson shows how to cost a trip, add a markup, and check whether a customer's offer is good enough. We carry on with the numbers from Lesson 2: a cost per kilometre of R7.20, based on 3,000 km in the month.
Step 1: count every kilometre
Work out the full distance for the job. Start where the vehicle starts the day and finish where it ends the day. If you drive back empty, those kilometres count too. You cannot ask the customer to pay for the loaded part only, if the empty return is part of how you do the job.
Step 2: work out the cost of the trip
Trip cost = total km × cost per km
Step 3: add a markup
If you quote exactly your cost, you earn nothing beyond your wage. You also have no cushion when a tyre bursts or the customer pays late. So add a markup: an extra percentage added on top of your cost. The percentage is your decision. It should reflect how risky the job is and what you want the business to build over time.
Markup in rands = trip cost × markup %
Price = trip cost + markup in rands
Example numbers only. A customer needs a load taken 120 km. The bakkie returns empty, so the trip is 120 + 120 = 240 km.
- Trip cost = 240 × R7.20 = R1,728.00
- The owner adds 15% on top of cost as a markup. The 15% is an example, not advice on what percentage to add.
- Markup in rands = 1,728 × 0.15 = R259.20
- Price = 1,728.00 + 259.20 = R1,987.20
The customer only sees 120 loaded kilometres. Price per loaded km = 1,987.20 ÷ 120 = R16.56.
Checking a customer's offer
Customers often name their own price. You can now test it in seconds. Compare the offer with your trip cost.
Example numbers only. The customer offers R1,500 for the same 240 km trip.
Offer minus trip cost = 1,500 − 1,728 = minus R228.
The owner would lose R228 on this job, after paying for fuel, tyres, service and the fixed costs, including their own wage. More jobs at a price below cost only make the loss bigger.
You can say no. You can also counter-offer with your price, or look at ways to lower the cost, such as a return load that pays. If you accept less than your price on purpose, make it a decision you understand, not an accident.
Add costs that belong to this trip only
Your cost per kilometre covers the everyday costs. Some jobs also bring costs of their own, such as tolls or parking. Add these at the amounts you will really pay. Check them for each route before you quote.
- Trip cost = total km × cost per km, including empty kilometres.
- Price = trip cost + markup. The markup is a percentage on top of cost that you choose on purpose.
- Compare any offer with your trip cost before you say yes.
- Add job-specific costs, such as tolls, at the amounts you will really pay.