Cost the whole trip before pricing the loaded leg
If only the loaded leg earns distance-based revenue, that revenue still needs to cover whatever empty running you assign to the trip. Dividing cost by total distance answers an operating-cost question. Dividing the same trip cost by loaded distance answers a revenue-per-loaded-kilometre question.
Define the trip boundary first. Does the empty distance include the approach to pickup, repositioning after delivery or a return leg? Use a boundary that matches your decision and apply it consistently. If another job covers part of that movement, document how you allocate it rather than quietly dropping the distance.
The calculator uses one operating cost per total kilometre for both loaded and empty running. It then adds only the trip-specific costs absent from that rate. More detailed planning may use different costs for each leg; this first model keeps that assumption visible.
A worked trip with 100 empty kilometres
All figures are hypothetical and before applicable taxes
Loaded distance is 400 km and empty distance is 100 km, for 500 total km. At C$1.20 per total km, distance-based cost is C$600. Add C$100 in trip costs that are not already included. Total modeled cost is C$700.
Break-even loaded-km revenue is C$700 ÷ 400 = C$1.75/km. At that rate, 400 revenue kilometres produce C$700, exactly covering the entered cost model.
If you mistakenly divide C$700 by all 500 km and then charge that C$1.40 rate only on the 400 loaded km, revenue is C$560. The gap is C$140 against the same C$700 cost model.
The empty leg is 20% of total distance in this example: 100 ÷ 500. It is 25% of loaded distance: 100 ÷ 400. Both percentages are arithmetically correct, but they use different denominators. Always label the basis.
Margin is a share of revenue
A 20% target margin means that revenue minus modeled cost is 20% of revenue. It does not mean adding 20% to cost. Solve for revenue by dividing cost by one minus the target margin.
For C$700 of cost, a 20% target margin needs C$700 ÷ 0.80 = C$875 of revenue. Spread over 400 loaded km, the target rate is C$2.1875/km. The C$175 difference is 20% of C$875.
A 20% markup would instead produce C$840 of revenue: C$700 × 1.20. Its C$140 difference is about 16.67% of revenue. Calling that a 20% margin would overstate the modeled margin.
Check the extra-cost line
Use additional trip costs for expenses missing from the per-km rate. For example, if a hypothetical C$100 trip charge is already allocated inside your operating cost, adding it again would count it twice. Conversely, leaving an absent charge out understates the cost the revenue must cover.
At a zero target margin, target revenue and break-even revenue are the same. A positive target margin is a planning scenario, not a statement about what a customer will pay. The calculator requires loaded kilometres above zero because revenue per loaded kilometre has no usable denominator otherwise.
A cost-based floor is not a market quote
The result depends on your chosen trip boundary and included costs. It does not estimate demand, competition, contractual terms, service risk or customer acceptance. Revenue is shown before applicable taxes; the tool does not calculate an invoice's tax treatment.
The target rate retains four decimals on screen to make the example transparent. Before issuing a real quote, decide the payable rate and rounding terms yourself and verify that the complete quotation covers the costs you intend it to cover.
Source & calculation notes
Original hypothetical trip model. Formula tests verify total cost, break-even revenue and target margin. No market-rate, tax-rate or customer-demand claim is made.
Calculation/source checkpoint: . Original explanation by Truck University; see our editorial method.
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