Your real cost per mile: how to work it out
The fare on your screen is not what you earn. Fuel, insurance, repairs and the car itself all come out of it, and they come out for every mile you drive, including the miles to the pickup and the ones spent waiting for the next ride. Knowing your real cost per mile is the first step to knowing which rides are worth taking.
What counts as a cost
Add up what the car costs you over a full year:
- Fuel: the litres you use per mile (your mpg tells you), times the price per litre, times the miles you drive.
- Insurance: the yearly premium. Hire and reward cover usually costs more than a private policy, so use your own figure.
- Maintenance and tyres: servicing, brakes, tyres and repairs. Look at what you really spent last year, and add the big jobs you know are coming.
- The car itself: the monthly payment or rental, or, if you own it outright, how much value it loses in a year.
- Taxes and checks: vehicle tax, the MOT, licences and anything else you pay on a schedule.
The formula
Real cost per mile = (fuel + insurance + maintenance + car + taxes and checks over a year) ÷ miles driven in that year.
Use every mile you drive for work, not only the paid trips. The drive to the pickup and the empty miles between rides cost exactly as much as the ones with a passenger.
A worked example
Take a car that drives 25,000 miles a year, does 45 mpg and buys fuel at £1.40 a litre. These figures are only an example: put your own in.
| Cost | Per year | Per mile |
|---|---|---|
| Fuel | £3,536 | £0.14 |
| Insurance | £1,500 | £0.06 |
| Maintenance and tyres | £1,250 | £0.05 |
| Car payment or rental | £3,000 | £0.12 |
| Taxes and checks | £500 | £0.02 |
| Total | £9,786 | £0.39 |
So this car costs about £0.39 for every mile, before any tax on your earnings and before counting your own time.
From miles to hours
Cost per mile is useful, but a working day is measured in hours. Count how many miles you really drive in an hour of work, waiting included. If it is 17, the car costs about 17 × £0.39 = £6.63 for every working hour. That is money you must earn before anything is left for you. Measure your own number for a week: it can surprise you, because waiting and pickup drives are part of it.
Check an offer against your cost
Suppose an offer pays £10.50, with 1.1 miles to the pickup and a 4.6 mile trip. The miles that matter are 5.7, so the offer pays £10.50 ÷ 5.7 = £1.84 per mile. Your cost for those 5.7 miles is about 5.7 × £0.39 = £2.22. What is left is £8.28, to pay for your time and your tax. Do the same sum for a short, cheap offer with a far pickup and the answer changes quickly.
Three common mistakes
- Counting only the paid miles and forgetting the pickup and the empty drive.
- Leaving out the car itself. A car that costs nothing to run this month still loses value every month.
- Working it out once and never again. Prices and repairs change: redo the sum every few months.
If you would rather not do this by hand, DLEM does it for you: you set your costs once, and it counts the pickup drive and those costs in the verdict it shows for each offer.