A variable cost is a cost that increases or decreases depending on your level of activity. Say, if you will not drive your trailer, you will have almost zero variable cost. Variable costs include fuel, lodging, parking fees, food on the road, scale fees and vehicle maintenance. Unlike fixed costs which are more predictable, variable costs tend to differ or change on a weekly or monthly basis.
Your variable costs can easily add up to a significant amount, decreasing your potential earning. If you want to increase your profit, you should check on your variable costs and see how you can significantly reduce them without affecting your operations. Here are some ways to reduce your variable costs:
5 tips to reduce your variable costs
1. Be fuel efficient
In one of our articles, we discussed how you could cut your fuel consumption by doing the five simple tips which include making sure that your tire is properly inflated to reduce rolling resistance. The Environmental Protection Agency (EPA) estimates that fuel economy can improve by up to 3.3 percent if your tires are properly inflated. If you consume less fuel, it could mean big savings at the end of the day.
2. Do regular preventive maintenance
One of the biggest variable expenses for hotshot businesses has to do with fleet maintenance. The cost of vehicle or trailer repairs can easily go to a few thousand dollars. Not only that, if you also factor in changing tires, you’ll surely have a big expense at hand.
Generally, your cost of repairs depends on your preventive maintenance program and how you maintain your vehicle and trailer. Regular preventive maintenance can significantly reduce your need for major repairs and can help keep your equipment working efficiently.
Moreover, when it comes to tire damage, if you often run with underinflated tires, you are increasing your tires’ wear rate by up to 10 percent. That means you have to replace your tires sooner than you should. To extend the life of your tires, always check your tire pressure before you hit the road.
3. Save as much on lodging cost
Hotel rates are generally expensive and they can chop a big chunk off from your profit. Most long-haul truckers have a sleeper cab, a nook which is typically installed at the back of the seat. While buying a sleeper cab may be a big expense, in the long run, it will help you save on lodging costs.
If you want to treat yourself to a nice bed and shower once in a while, you may check out some hotels that offer driver rates along your route. Driver rates are way cheaper than regular rates so it would be nice to take advantage of this offer when available.
4. Use quality fuel
When we buy fuel, we often see the labels, premium and regular. Premium is the high-end fuel which is a few octane points higher than regular. Premium fuel makes a more efficient and smooth burn in the combustion chamber.
On the other hand, regular or lower-grade fuel typically lacks the necessary refining additives to make them run smoothly in the engine. As a result, they leave deposits in the valves and combustion chamber of the vehicle, affecting the service life of the engine.
Most gas stations sell three types of fuel which differ in the octane levels: regular (about 87 octane), mid-grade (about 89 octane) and premium (91 to 93 octane). There can be a huge price gap from regular to premium so we can’t blame those who use regular.
As a rule of thumb, read your owner’s manual to see what’s the recommended fuel or octane rating. Going below what’s recommended may save you on fuel cost now but in the end you may not end up saving at all due to the resulting repairs.
5. Follow a more efficient route
Poor routing can cause you to spend extra variable costs on fuel, toll and parking among others. Thankfully, there are now modern routing apps that will help you find the shortest, quickest or easiest route to your destination.
You can check this article for some of the coolest routing apps that you can use for hotshot.
With the increasing cost of basic commodities, keeping your variable costs down can be a challenge. However, it is worth trying since reducing your expenses could also mean increasing your profit. Feel free to also share with us your tips in keeping your expenses low and your income high.