What costs should I include in total cost of ownership (TCO)?

Include all vehicle-related expenses: fuel, maintenance and repairs, insurance, depreciation, loan/lease payments, registration and permits, tolls, parking, and any other regular costs.

Why is depreciation important in TCO?

Depreciation is the loss of vehicle value over time. This is a real cost you must recover through pricing or business revenue. A $40,000 vehicle depreciating over 5 years costs ~$667/month in depreciation.

How do I calculate monthly depreciation?

Divide purchase price by useful life in months. A $40,000 vehicle over 5 years (60 months) = $667/month depreciation. Or use resale value: ($40,000 − $15,000) ÷ 60 = $417/month.

What mileage should I use for calculating cost per mile?

Use actual or realistic monthly mileage. Higher mileage spreads fixed costs over more miles, lowering cost per mile. Lower mileage means higher per-mile cost for the same vehicle.

How do I use cost per mile for delivery pricing?

Your cost per mile is the minimum to break even. Add profit margin (20–50%) to set pricing. If cost per mile is $0.22 and you want 30% profit, charge $0.29/mile minimum.

How does fuel efficiency affect fleet cost per mile?

Better fuel efficiency (higher MPG) reduces fuel costs, lowering total monthly costs and cost per mile. A 10% improvement in fleet fuel efficiency reduces cost per mile proportionally.

Fleet Cost Per Mile Calculator

Enter all monthly vehicle costs and total miles driven to calculate total cost of ownership per mile. Use this to set delivery pricing, evaluate route profitability, and make fleet decisions.

Fleet managementDelivery pricingRoute profitabilityTCO analysis

Fuel Cost (per month)

Fuel, maintenance of fuel systems

Insurance Cost (per month)

Maintenance Cost (per month)

Oil changes, tires, repairs, inspections

Depreciation (per month)

Loss of vehicle value over time

Financing Cost (per month)

Vehicle loan or lease payments

Other Costs (per month)

Tolls, permits, registration, washing

Total Miles Driven (per month)

Estimated or actual miles driven this month

Formula

Total Monthly Cost = Fuel + Insurance + Maintenance + Depreciation + Financing + Other | Cost Per Mile = Total Monthly Cost ÷ Miles Driven | Cost Per Km = Cost Per Mile ÷ 1.60934

Total cost of ownership (TCO) includes all vehicle operating expenses: fuel, insurance, maintenance, depreciation, financing, and miscellaneous costs. Dividing by miles driven gives the true per-mile cost, which is essential for pricing delivery services, evaluating route profitability, and making fleet management decisions. A vehicle costing $2,500 per month for 10,000 miles costs $0.25 per mile in total operating costs.

Worked Example

Delivery vehicle monthly costs: Fuel $800 · Insurance $150 · Maintenance $200 · Depreciation $400 · Financing $500 · Other $100 · 10,000 miles driven:

Total cost = $800 + $150 + $200 + $400 + $500 + $100 = $2,150

Cost per mile = $2,150 ÷ 10,000 = $0.215/mile

Cost per km = $0.215 ÷ 1.609 = $0.134/km

To profit, charge minimum $0.25–$0.30 per mile (including markup).

Breaking down costs: Depreciation is 19%, Financing 23%, Fuel 37%, Maintenance 9%, Insurance 7%, Other 5%. Depreciation and financing are large fixed costs; improving fuel efficiency saves on variable costs.

Frequently Asked Questions

Use this in your workflow

Determine accurate cost per mile to set competitive delivery pricing and evaluate route profitability. Use the Fuel Cost Calculator to plan trip expenses or the Gas Mileage Calculator to track vehicle fuel efficiency. Calculate Shipping Costs based on vehicle operating costs. Browse all Free Business Calculators.

Worked example: delivery business vehicle costs

Calculate monthly operating cost and cost per mile to set delivery pricing.

Cost Category	Monthly Amount	% of Total
Fuel (gasoline)	$800	37%
Vehicle financing (loan)	$500	23%
Depreciation	$400	19%
Maintenance (oil, tires, repairs)	$200	9%
Insurance (commercial)	$150	7%
Other (tolls, permits, washing)	$100	5%
Total monthly cost	$2,150	100%

Cost Per Mile Calculation:

Total monthly cost of $2,150 ÷ 10,000 miles = $0.215 per mile (or $0.134 per km)

Delivery Pricing: To make 30% profit, charge minimum $0.28–$0.30 per mile (or $0.17–$0.19 per km). At this rate, 10,000 monthly miles generates $2,800–$3,000 revenue, covering costs and profit.

This example shows how depreciation and financing are the largest components of vehicle cost, followed by fuel. Smaller vehicles or used vehicles with paid-off loans have lower cost per mile. Improving fuel efficiency from 18 MPG to 25 MPG could save $200+/month in fuel costs.