Owner-operators often earn more than company-employed truck drivers. But unlike company-employed truck drivers who have about 12 payment methods, owner-operators typically see a compensation structure in one of two ways.
In this article, we discuss how owner-operators get paid.
How Do Owner Operators Get Paid?
Owner operators are typically paid on a per-mile basis or by taking a fixed percentage of the revenue of a load. Owner operators are fully compensated for accessorial charges such as detention, layover, driver assist, and fuel.
1. Mileage
Getting paid by mileage is as simple as it sounds. The more miles you log, the higher your pay.
The mileage payment method is unconcerned with the value of the load you carry. You may be carrying all the gold in the world in your trailer and you would still earn the same amount as someone who traveled the same distance as you carrying water.
The benefit of payment by mileage is that you have more control over how much you earn. You can know how much you’re going home with at the end of each day after having traveled a particular distance.
Another benefit of the mileage method is its earning consistency.
2. Percentage of load
Percentage of load is the owner-operator payment method that has you get paid a certain percentage of the value of the line-haul for the load you carry. Often, the percentage is between 25% and 85%.
This method is usually seen by owner operators who are leased on with a larger trucking companys rather than those who own their own company or work for a smaller outfit.
Unlike the mileage payment method, where every day is a good day, the percentage of load payment method has good days and bad days. Good days are those days you land high paying lanes. And the bad days are when are assigned on a lower paying lane.
However, there’s a way to ensure your bad days are few. After all, you are the owner-operator and you can reject any load you’re not comfortable hauling.
Which Owner-operator Payment Method is Best For You?
There’s no way we can know for sure what the best owner operator payment method is for you. But you can. Some factors that can help you determine how you should be paid as an owner-operator are:
1. Your lifestyle
When you get paid, how do you spend your money? Are you single, and you spend a lot of time on the road? If you do, you may not mind the percentage of load payment method. This is because your bad days would only affect you, and not the rest of your family. You can live with the uncertainty of how much your next income is on your own.
But do you have a family you need to take care of? If you do, you might want to err on the side of certainty that the mileage method offers. Limiting uncertainties would help you make sustainable plans for the sake of your loved ones.
2. How much control do you want over your income?
The mileage payment method gives you more control over your earnings. When you step out in the morning, you have an estimate of how far you’re going to travel that day. And with that, you know how much you’re likely to have earned.
The percentage by mileage method, however, does not have this level of control because you might not land high-value loads all the time.
Summary
Owner-operators only have percentage of load and mileage as their two main payment methods. And these two are more than enough for most owner-operators.
By the way, it’s no news that owner-operators have very high gross income. But is there much disparity between their net income and their gross income? Learn about that and more in our article that describes how much owner-operators earn.