Mileage Pay Vs Percentage Pay - Which Is Better?

Topic 25534 | Page 1

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Brian M.'s Comment
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I am sure this topic has been discussed before and perhaps beaten to death but which pay is better in your opinion? Percentage pay of load or cents per mile?

I see the pros of both but also the cons of both? And if you don’t mind sharing give me some examples of your experience.

PackRat's Comment
member avatar

I’ve done both, but I prefer the CPM route. If freight rates drop (and they always do), so does your pay if you are on the percentage plan. Also, being cynical, I never trust that I know for a fact how much the freight paid, thus how do I know I’m actually being paid honestly? Unless you are actually talking to the shipper , you cannot know 100% what the factual dollar amount was. CPM is more within my control, which goes back to the factual advice given on here for years: this is a performance-based profession. Run hard to get more miles which will equal more money. The only thing I wish sometimes is that we got paid by the pound.

Shipper:

The customer who is shipping the freight. This is where the driver will pick up a load and then deliver it to the receiver or consignee.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Old School's Comment
member avatar

Brian, that's a good question, and it's a subject that many newbies get conflicted over. I'm going to give you my take on it and we will see what some others have to say about it. I know we've recently had a brand new driver in here claiming he's extrapolated his first couple of weeks percentage pay out, and he thinks he is on track to make 90,000 dollars his rookie year! That ain't happening, but it's intriguing to see him thinking that way, and making the effort. He will be disappointed, I'm afraid.

Percentage pay is designed to protect the company from the volatile swings in the freight markets. When the market is good like it has been last year, the drivers can reap some of the benefits. The market is swinging pretty violently back downward right now and correcting itself. It's always doing this, and by paying a percentage of the load to the driver, the company can assure themselves of controlling their labor expenses during the unexpected downturns of a very cyclical business.

For some strange psychological reason people think they're going to make more money by getting paid a percentage of the load. It's a gimmick, and the companies offering it know most drivers will take the gamble. Another down side to percentage pay is dead-head miles. There's no contract involved on dead-head miles, so even if you're making 35% of the load... well, you're probably good enough at math to figure out what 35% of zero is.

Most mileage pay contracts pay you for loaded and empty miles. I've been dead-headed 1,400 miles before and got paid my regular mileage rate for it. To be fair most percentage pay contracts pay you a little bit after you reach a certain threshold number on a dead-head run. Like maybe after 150 miles they start paying you x amount per mile, but you could still end up doing a considerable amount of "free" and/or lower paying work over the course of each year.

Your mileage pay doesn't get reduced during downturns in the market, nor does it increase during good times, but last year as the markets turned crazy good, most of the major carriers were forced to give "across the board" pay increases. Guess what? Those drivers are still at those levels. They are not having their pay reduced now. I know the drivers on my account got a three cent per mile increase on top of our regular pay increase. The guys on percentage pay will see their pay reduced as the freight contracts tighten up. 35% of 2,000 dollars is less than 35% of 3,200 dollars, but it's still 35%!

There's another thing about percentage pay that's troubling to me. Do you, as the driver, have an accurate way to know what the load really pays? If the company has paperwork showing you it paid 2,500 dollars can you verify that? Very few loads go out without some negotiating taking place. I'm not sure a driver can really be confident in the numbers his percentage is calculated from. A driver getting paid by the mile is confident he's getting paid the correct amount, and he doesn't have to donate his time on dead-head miles while traveling to pick up his next load.

SAP:

Substance Abuse Professional

The Substance Abuse Professional (SAP) is a person who evaluates employees who have violated a DOT drug and alcohol program regulation and makes recommendations concerning education, treatment, follow-up testing, and aftercare.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

Robsteeler's Comment
member avatar

Old School, I guess that’s why so many companies seem to push leasing. They only pay a percentage, plus no upkeep on the equipment. Big savings.

Rubber Duck's Comment
member avatar

I just did some math on my last seven settlements. I work for percentage. percentage pay but it has always worked out for me. I may be the exception but I’ve always done well on percentage. Yes it sucks to deadhead for free but if you have good fleet manager he will try his best to make it all work out in the end. At least mine does. The one thing oldschool was right about is the rates have gone down this year. Last year you could make money with your eyes closed. You could run in reverse for 400 miles and still make good money. So here’s the last seven settlements by the mile including deadhead. .68 .65 .61 .78 .77 .75 .90 per mile. It wasn’t rare last year to average 88 cpm. If the rates would ever get so bad I was making less than I could at a similar job hauling the same freight I would just quit. I heard every word everyone said and it’s all true about percentage. Empty miles are pretty much free. .20cpm after 200 miles isn’t going to put a smile on your face rolling down the road. I can’t be sure the company is being honest about what they get. I do get told what I’ll make on each load before I pick it up. I have a friend who works for another company and he doesn’t know what his load pays for 2 weeks after he drops it off. Every paycheck is like a scratch off ticket for him. I just wanted to shed light on the fluctuation of the cpm and that even the worst week isn’t that bad. My pay still boils down to run hard, turn as many miles as possible and make as much as I can.

Deadhead:

To drive with an empty trailer. After delivering your load you will deadhead to a shipper to pick up your next load.

Fleet Manager:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Old School's Comment
member avatar
My pay still boils down to run hard, turn as many miles as possible and make as much as I can.

That's a great point, and something I should have pointed out. Everything about this job boils down to the driver being able to get the most done. No matter how your pay is calculated, the drivers making the most money are the drivers who get the most done. Top Tier Drivers get the top pay.

Amish country's Comment
member avatar

I run on percentage but I am also "local". I do pretty well usually grossing around 1,100 for 5 days and between 1,200-1,400 for 6 days of work in a week(paid more on weekends) at 24%. I have a pretty good relationship with my DM so he has told me what they get paid per ton for loads and I can figure out what my pay would be from that. Using that info and checking I havent been paid any different then what he said it pays them. Not all companys are like that though and I have heard stories of people getting taken advantage of.

In my situation I can control how much product I load under 80k so I do have some control of my pay for each load. Like it's been said it ultimately comes down to how you run. I deliver 2 loads daily but the majority of the other drivers in my yard only do 1. Most of them are complaining about their pay too.

If you work you end off you can pretty much make money no matter which way you get paid.

Dm:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.
Robert B. (The Dragon) ye's Comment
member avatar

The company I work for is based on percentage and I wouldn't have it any other way. For the majority of companies, high miles and cpm works out better but when you gather experience and can work your way into something a bit more specialized, percentage has its perks. We don't haul what most would consider general flatbed freight. In fact, we don't haul anything under $2 a mile and the vast majority, even right now with freight rates being lower, are closer to $3. I'm currently on pace for around 85k or better this year, averaging 2300-2500 miles per week with low deadhead miles. In regards to knowing what the load pays, they will send the actual rate-con for each load, so I know exactly what I'm making.

An example of oddball things we haul. I picked up a 5,000# generator for Ziegler Caterpillar power generation division on Thursdayand delivered to another one of their locations 240 miles away. That "in house transfer paid just under $5 per mile. I left there, went 12 miles to John Deere in Ankeny Iowa and picked up an oversized implement going to Washington for a Monday morning delivery. 1640 miles paying $3 per mile to the truck after permits and everything else.

My total miles for this week including my other load I dropped off on Wednesday will be around 2450 with my gross being roughly 2100 for the week.

Deadhead:

To drive with an empty trailer. After delivering your load you will deadhead to a shipper to pick up your next load.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

OWI:

Operating While Intoxicated

andhe78's Comment
member avatar

What has always made me laugh about this discussion—I’m a second year driver working for a “starter” company that hauls general flatbed freight, while getting paid by the mile. I too gross over $2k weekly and am on track to make over $85k this year. How odd is that?

Brett Aquila's Comment
member avatar

This is a fantastic discussion which will really help people understand why at Trucking Truth we focus so hard and teaching people that their destiny in this industry is in their own hands. Making great money, having great relationships with the people at your company, and getting all of those special perks does not depend on finding just the right company to work for. You can have that at any of the major carriers hauling any type of freight using any type of pay system. There are even some smaller companies out there where you can do just as well.

Great drivers make great money, drive beautiful equipment, and get treated really well at any of the major carriers, and even some of the smaller ones. Small companies are much more of a wildcard, but the major carriers all have everything you'll need to be highly successful in this industry.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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