Ask an operator what a kilometre costs them and you usually get a number derived from fuel and a feeling.
It is always too low, and the gap is not small. Here is how to build the real one.
The nine costs in a kilometre
Direct, per kilometre driven
- Fuel — at the mileage you actually get in traffic, not the brochure
- Tyres — cost of a set divided by realistic life
- Maintenance — servicing, brakes, clutch, the annual surprise
Fixed, per vehicle per month, divided by kilometres actually run
- EMI or the capital tied up in an owned vehicle
- Insurance — commercial, not private
- Permit, fitness, road tax, green tax where applicable
- Driver cost — salary or share, plus batta
The two everyone omits
- Dead running — kilometres between the last drop and the next pickup, and the empty return leg on outstation work
- Idle days — the vehicle earns nothing while the fixed costs continue
Items 8 and 9 are where the number in your head diverges from reality. Both are invisible unless something records them, which is precisely why they are the ones left out.
The division that decides everything
Fixed costs divided by kilometres actually run, not kilometres you hoped for.
A vehicle with ₹45,000 of monthly fixed cost running 6,000 km carries ₹7.50 per kilometre. The same vehicle running 4,000 km carries ₹11.25. Same vehicle, same costs, fifty percent difference in the number that decides whether your rate card works.
This is why utilisation matters more than any negotiation you will ever have with a fuel supplier. It is also why a quiet month does not just reduce revenue — it raises your cost base per kilometre at exactly the moment you can least afford it.
Do it per vehicle, not per fleet
A fleet average hides the vehicle losing money. Two sedans on the same rate card can differ by thirty percent because one runs airport work at good utilisation and the other does short city hops with long gaps.
The fleet average tells you the business is fine. The per-vehicle number tells you which four vehicles are carrying the other six, which is the actionable version.
The exercise
Take one vehicle and one month. Fill this in with real figures:
| Line | Where the number comes from |
|---|---|
| Kilometres run | Odometer, opening and closing |
| Revenue | Trips completed |
| Fuel | Actual spend, not calculated |
| Driver cost | Salary or share, plus batta paid |
| Maintenance | Month’s spend, plus a provision for the annual |
| EMI / capital | The financing line |
| Insurance, permit, tax | Annual, divided by twelve |
| Cost per km | (All costs) ÷ kilometres run |
| Revenue per km | Revenue ÷ kilometres run |
The gap between the last two rows is your margin per kilometre. Multiply it by a month of kilometres and compare it against what you thought the vehicle earned.
Most operators doing this properly for the first time find one of two things: a vehicle they assumed was profitable is not, or the fleet is doing better than they thought and they have been under-pricing out of anxiety. Both are worth knowing.
Why this is hard by hand and easy with records
Every input above already exists in your business. Odometer readings, trip revenue, fuel spend, driver payouts. The difficulty is that they live in five places, and assembling them per vehicle per month is an afternoon’s work that nobody has.
When trips carry their own distance and charges, and driver earnings sit against the trips that produced them, this stops being an exercise and becomes a report.
Our fare and package pricing page covers applying a rate card consistently once you know what it should be, and the one-way fare post covers the outstation version, where dead running dominates the arithmetic.