Guide
Most owner-operators either charge nothing for travel or use the IRS mileage rate, and both are wrong. Here's the real cost per mile and a three-zone pricing structure you can put on your website today.
The IRS mileage rate (around $0.70/mile for 2025) is a tax deduction figure. It's built to cover fuel, depreciation, insurance, tyres and maintenance — the cost of running the vehicle. It says nothing about the cost of you sitting in it instead of being on a paying job.
If you quote travel at $0.70/mile, you're charging for the van and giving your own time away free. For a service business, your time is the expensive part, not the diesel.
Every mile you drive costs you two things:
The formula:
True cost per mile = mileage rate + (loaded hourly rate ÷ average speed)
Say your loaded hourly rate is $95 (covers wages, overhead, profit margin — not just what you pay yourself) and your average speed on the roads you actually drive, including lights and turns, is 35 mph.
| Component | Calculation | Cost per mile |
|---|---|---|
| Vehicle (IRS-style rate) | flat rate | $0.70 |
| Time | $95 ÷ 35 mph | $2.71 |
| True cost per mile | $0.70 + $2.71 | $3.41 |
That's roughly five times the IRS figure. And that's one-way. A job 20 miles out is a 40-mile round trip, so the unpriced cost is 40 × $3.41 = $136 before you've turned a screwdriver. Charge $0.70/mile for that and you've billed $28, leaving $108 of your own time and margin unrecovered on that trip alone.
Take a job that would normally run at a healthy 40% margin close to base: $600 revenue, $360 cost, $240 profit. Now put it 45 minutes each away by road, unpriced.
Fold that into the same $600 job and your real cost is $360 + $174 = $534. Profit drops from $240 to $66 — margin falls from 40% down to about 15% on paper before you've even accounted for the wasted capacity (that 90 minutes you weren't earning could have been a second call closer to home). Run the numbers on any specific job through the job profitability calculator before you commit to a quote — it'll show you this drop instantly.
Customers don't want a mileage calculation on the phone. They want a number. Three zones does the job for most trades:
| Zone | Distance from base | What you charge |
|---|---|---|
| Zone 1 | 0–15 miles | Free — built into your standard rate |
| Zone 2 | 16–30 miles | Flat travel fee, $45–$95 |
| Zone 3 | 30+ miles | Quoted per job, minimum job value applies |
Why these bands work:
Don't copy the example figures. Plug in your own:
Pricing travel properly protects margin on individual jobs, but the real fix is not driving as far in the first place. If a big share of your work is coming from 20+ miles out, you're paying the time cost of travel whether you charge for it or not — every mile is a mile you're not doing a second job.
Batch far-out jobs on the same day of the week. Offer a small discount to customers who can flex their booking to fit your route. Or simply stop marketing in zones that consistently need Zone 3 pricing to be worth it — if nobody there will pay it, that's useful information, not a problem to solve with a bigger discount.
Keep it simple on the phone or the website: "Jobs within 15 miles have no travel charge. Beyond that we add a $45–$95 travel fee depending on distance, and for jobs over 30 miles we'll give you a specific quote including travel." That's honest, it's quick to say, and it stops you subsidising strangers' postcodes out of your own pocket.
The Small Business Operations Kit ($19) turns guides like this one into fill-in-once worksheets: rate card, quoting sheet, job costing, payment terms and follow-up templates. Built by the same people who write these guides.