How do owner-operators get paid? Both ways explained.
May 05, 2020
There are basically two leasing models owner-operators utilize to generate revenue: an all-in/flat rate and mileage.
How owner-operators get paid, through either an all-in/flat rate or by the mile, really boils down to how they get their loads.
All-in/flat rate model
Owner-operators who earn revenue by receiving an all-in/flat rate for each load they haul, often get their loads by leasing-on with a company or getting loads from a load board.
For example, Van Truckload and Tanker owner-operators who lease-on with Schneider select the loads they want to haul from the company’s private load board and then receive 100% percent of the revenue from the load. They do not have to calculate fuel surcharge or accessorials.
Benefit of all-in/flat rate model
The benefit of an all-in or flat rate model is that, in many cases, you can generate a higher revenue without driving more miles, depending on the market price of the shipment.
Owner-operators who fall under a mileage model, must run more miles and burn more fuel to increase their revenue.
The second way an owner-operator can generate revenue is by the mile. Owner-operators who earn revenue on a paid by the mile basis often get their loads through a dispatcher.
Mileage revenue is pretty self-explanatory. For example, an owner-operator could make $1.35 per mile on a load that requires 300 miles of driving. $1.35 multiplied by 300 miles is $405. Mileage rates can vary.
Benefit of mileage model
The benefit of being paid by the mile is that your rate per mile generally stays the same, regardless of how much the trucking company you contract with makes on their load invoice.
Typically, with paid by the mile models, owner-operators are assigned to their loads and don’t have a whole lot of say in what they do/don’t haul. Whereas, when owner-operators generate revenue through an all-in lease contract, they often pick their loads from a public or private load board.