Visible Costs vs Hidden Costs

📖 7 min read 🎓 Module 1 - Lesson 2

🔍 THE PROBLEM

Most operators only think about:

  • ✅ Fuel
  • ✅ Tolls (when applicable)
❌ SERIOUS MISTAKE

There are hidden costs silently eating your profits. Visible costs represent only 60-70% of your total operating costs.

📊 REAL COST TABLE

Straight Truck / Sprinter Van (per mile)

VARIABLE COSTS Range
Fuel $0.42 - $0.50
DEF (Diesel Exhaust Fluid) $0.03 - $0.05
Scheduled maintenance $0.08 - $0.12
Tire wear $0.03 - $0.04
Tolls/Parking (average) $0.02 - $0.05
VARIABLE SUBTOTAL $0.58 - $0.76
FIXED COSTS Range
Van payment/lease $0.15 - $0.25
Insurance (liability + cargo) $0.08 - $0.12
Annual licenses/permits $0.01 - $0.02
Vehicle depreciation $0.05 - $0.08
Phone/apps/technology $0.01 - $0.02
FIXED SUBTOTAL $0.30 - $0.49
TOTAL OPERATING COST: $0.88 - $1.25 /mile

* Based on 100,000 miles per year

👻 THE MOST IMPORTANT HIDDEN COSTS

1. DEPRECIATION ($0.05-$0.08/mile)

The most "invisible" — but very real:

  • Van purchase: $80,000
  • Value in 5 years: $30,000
  • Loss in value: $50,000
  • = $0.10/mile in losses

You don't see this money leave daily, but when you sell your van, you'll feel the impact.

2. VAN PAYMENT ($0.15-$0.25/mile)

⚠️ HEADS UP: If you run FEWER miles, this cost PER MILE goes up:
  • 6,000 miles/month: $1,800 ÷ 6,000 = $0.30/mile
  • 10,000 miles/month: $1,800 ÷ 10,000 = $0.18/mile

Your fixed cost per mile improves by running MORE miles (as long as you stay profitable).

3. INSURANCE ($0.08-$0.12/mile)

Typical annual insurance:

  • Liability: $6,000
  • Physical damage: $3,000
  • Cargo: $1,500
  • TOTAL: $10,500/year = $0.105/mile

You pay this EVEN WHEN YOU'RE NOT MOVING. That's why you need to maximize profitable miles.

🚨 THE HIDDEN COST RULE

When your van is MOVING, it's generating costs.
When your van is PARKED, some costs keep running.

There is NO "day off" for: Insurance, Van payment, Depreciation, Licenses

✏️ CALCULATE YOUR REAL COSTS

STEP 1: Monthly Fixed Costs

  • Van payment/lease: $_________
  • Insurance (÷ 12 if annual): $_________
  • Licenses/permits (÷ 12): $_________
  • Phone/apps: $_________
  • TOTAL MONTHLY FIXED: $_________ (A)

STEP 2: Average Monthly Miles

Miles you run per month: _________ (B)

STEP 3: Fixed Cost Per Mile

(A) ÷ (B) = $_________/mile (C)

STEP 4: Variable Costs

  • Fuel (your real MPG): $_________/mile
  • DEF: $_________/mile
  • Maintenance: $_________/mile
  • Tires: $_________/mile
  • Tolls/parking average: $_________/mile
  • TOTAL VARIABLE: $_________ (D)

STEP 5: YOUR TOTAL COST PER MILE

(C) + (D) = $_________/mile

Save this number. You'll need it in the next lesson.

🚨 COST RED FLAGS

Signs your costs are out of control:
  • ⚠️ Fuel >$0.55/mile → Review your driving style
  • ⚠️ Maintenance >$0.15/mile → Your van needs attention NOW
  • ⚠️ Fixed costs >$0.50/mile → You need more miles or lower payments
  • ⚠️ Total cost >$1.30/mile → Hard to be profitable — review your operation

💡 KEY TAKEAWAY

Hidden costs are REAL.

Just because you don't see them every day doesn't mean they don't exist.

Your van ALWAYS costs money.
The question is: are you earning MORE than it costs?