Cost per mile is an essential metric for anyone who drives, whether it’s for personal use or business purposes. Calculating cost per mile can help you budget more efficiently, decide if a specific trip is worth its cost, and even determine actual expenses for work-related trips. This article will guide you through the process of calculating your vehicle’s cost per mile in three simple steps.

Step 1: Determine Your Fixed Costs

These are expenses that occur regardless of how much or how little you drive. They typically include:

1. Car payment or lease payments

2. Insurance premiums

3. Registration fees

4. License fees

5. Depreciation (for owned vehicles)

Take the total of these costs and divide it by the number of miles you drive in a year. This will give you your fixed cost per mile.

Fixed cost per mile = Total fixed costs / Annual miles driven

Step 2: Determine Your Variable Costs

Variable costs depend on how much you drive; these expenses go up as your mileage increases and include:

1. Fuel costs

2. Maintenance (such as oil changes, new tires, and regular check-ups)

3. Repair costs

Track these expenses over a specific period (e.g., a month or a year) and divide them by the number of miles driven during that period. This will give you your variable cost per mile.

Variable cost per mile = Total variable costs / Miles driven during the period

Step 3: Calculate Total Cost Per Mile

Now that you have both fixed and variable costs, add them together to find the total cost per mile:

Total cost per mile = Fixed cost per mile + Variable cost per mile

Example:

Let’s say you have $5,000 in annual fixed costs and drive 15,000 miles a year, while spending $3,600 on variable costs during that time.

Fixed cost per mile = $5,000 / 15,000 = $0.33

Variable cost per mile = $3,600 / 15,000 = $0.24

Total cost per mile = $0.33 + $0.24 = $0.57

In this case, your total cost per mile would be 57 cents.

Conclusion:

Calculating your cost per mile can be a valuable tool in understanding your vehicle’s actual operating costs and making more informed decisions about travel expenses and budgets. Keep in mind that costs can vary depending on factors such as driving habits, vehicle type, and location. Periodically recalculate your cost per mile to stay up-to-date with changes in expenses or driving patterns.