Why Every Owner Operator Needs a Maintenance Budget
By admin on January 30, 2017
As an owner operator, the more accurately you can predict your yearly costs, the better. With a concrete idea of how much you’ll spend per mile on variables like food, showers, and fuel, you’ll be able to know with confidence how many loads you need to haul (at what pay rate, factoring in deadhead mileage) to make a profit at the close of the fiscal year.
Maintenance is a substantial cost that owner operators face yearly, but it can be difficult to predict. So, how do you prepare for maintenance issues that your truck doesn’t have yet?
How a Maintenance Budget Helps
Repairs are expensive. Big rig mechanics are a specialty, and as such, can cost upwards of $100 per hour, not including the cost of parts, and your time lost while waiting on the repair. The price may seem steep on the surface, but consider that the shop must account for the mechanics’ wages, insurance, retirement, worker’s compensation, shop mortgage payments, electric and natural gas bills, property taxes, tools, equipment, and more.
A new driveshaft is a fairly common maintenance requirement for trucks. The average cost to rebuild a driveshaft comes out to $1,200. This includes straightening, balancing, new carrier bearing, and new universal joints, but does not include labor.
If you find your truck needing a new transmission, be prepared to fork out over $3,000. This cost includes new bearings, seals, gaskets, and other parts that may have worn out on the transmission.
The labor and parts cost to reseal a flywheel housing averages out to just under $2,000.
The above repairs are just a few examples of one central point: maintenance is expensive. Running into a maintenance issue without a nest egg to fall back on can be disastrous to an unprepared owner operator. To avoid breaking the bank, there are two types of maintenance to consider: preventative maintenance and corrective maintenance.
A large part of putting together an accurate maintenance budget is really just about knowing your truck. While “knowing your truck” may bring to mind images of your rig formally introducing itself at the next truck stop, understanding your truck’s needs actually comes down to one thing – preventative maintenance.
Preventative maintenance typically consists of oil changes, filter and engine checks, tire alignment, and a few other small upkeep tasks. Preventative maintenance performed on a regular basis puts you in charge of your rig’s future. And while systematic preventative maintenance can feel expensive at the time, it is a regular charge that you can account for in your budget. In the end, you will find yourself saving money by fixing small issues before the problem compounds.
How much should you be putting away for preventative maintenance? Ultimately, it comes down to the age of your truck.
While systematic preventative maintenance is a fixed cost (it is both constant and predictable), corrective maintenance is a variable cost. Understanding the difference is important when putting your maintenance budget together. The more accurately you record your fixed costs, the better prepared you will be if a variable cost ends up being more expensive than you anticipated.
The average owner operator drives about 101,000 miles per year, according to the OOIDA Foundation. At that rate, assuming the truck is 2 years old (see chart), your preventative maintenance savings goal would be about $7,070. Any money that you save over $7,070 will help mitigate any corrective maintenance costs that might pop up.
Try to be cautious when predicting maintenance costs – estimate more than you think you will need. You know your truck best. What are its weak points? If your engine is finicky in the cold, for example, you can assume you’ll need to replace parts come spring.
Tires are a variable expense (and, arguably, are a part of corrective maintenance), but are easy to predict as far as repairs. If you make it through the year without replacing your tires, you’re a trucking superhero. Chances are, you will have to replace all four tires at least once within a 12-month time span. Average yearly tire costs come out to about $1,000, according to RigBooks, and can be as much as $4,000 or more.
Variations in cost are due to variables such as: miles run, load weight, how many tires you have, types of tires you buy, and wear patterns of the truck. When buying tires, consider the cost per tire as well as the expected life of the tire to decide on the most cost-effective choice.
We’re Here to Help
There is a lot to consider, both financially and otherwise, as an owner operator. It can be difficult to find time to put together a maintenance budget, in between time on the road and much-needed relaxation. If you aren’t sure where to start with your maintenance budget, or could just use an extra set of eyes to look things over, Quality’s Tax and Accounting team is a phone call away.