What driving an extra ten miles a day can do to a business’ bottom line.
Have you heard the story about how much a Starbucks Coffee Break costs?
The employee who wants to earn $ 50,000.00 annually is clocked at $24.03 per hour or $6.00 per quarter hour. Two fifteen minute breaks a day = $ 12.00 per day x 5 days = $60.00 + a 12 ounce latte @ $2.75 per cup 2x per day = $5.50 per day or $27.50 per week. Combine the time and latte for a weekly investment of $87.50 or $4,550.00 per year. Can the same be said for driving an extra 10 miles due to routing, side trips or unauthorized vehicle use?
Let’s assume a driver’s total of side trips, routing errors, unauthorized use or getting lost averages 10 miles a day. What are the simple costs involved? Gas right? Let’s take a closer look.
Total Mileage: 10 miles per day or 50 miles per week
A vehicle averaging 12 mpg = .08 gallons used daily x 5 days = 4 gallons used weekly @ $2.75 per gallon = $11.00 cost per week or $572.00 annually. Not enough to make a major change right? Then consider this:
Let’s say your technician is paid a base rate of $ 20.00 per hour. If the technician drove 10 miles out of the way is that also 10 additional miles to return? A vehicle driving an average of 40 miles in a one hour period equates to 20 miles in a typical half hour or $10.00 of the labor paid. $10.00 per day (1/2 hour of lost labor) equates to $ 50.00 per week or $2600.00 per year. The loss of time devoted to driving means a loss of billable or productive time to the company. A technician billing $75.00 per hour would essentially lose $187.50 per week or $9750.00 per year.
Now come the tougher questions –
What cost is the extra mileage or wear (oil/tire/engine) on a vehicle based on driving an extra 2600 miles annually?
What additional fuel is being used if the driver is speeding? According to Money magazine, every 5mph over 60mph costs an additional .20 more per gallon of gas.
What liability from insurance or risk does the company have during these additional ten miles?
Naturally, the costs can vary depending on each situation. The problem is, those numbers would actually drive up the loss. Whatever your case, most business owners don’t realize the total monetary loss from such a minor infraction. Scheduling or running a FleetBoss Stop Detail/consolidation report will identify this type of problem instantly. In a year of driving an extra ten miles a day, a single employee can produce $12,922.00 of bottom line profit losses. With this annual figure, the bigger question may be how long has this employee been working for you and is there more than one? Pass the Starbucks.