Pay is top of mind for most (if not all) truck drivers right now. A lot of drivers have had to adapt in recent years, making little changes — like making sure their truck is as fuel efficient as possible — to big changes — like completely changing their running style and running more miles.
Without these changes, it can be hard for some drivers to earn a decent profit month after month — and no one wants to be in that scenario.
Thankfully, there’s another way you can influence your earnings, and that’s by choosing a pay package that works for you. By choosing a pay package that matches your running style and the current market we’re operating in, you can influence how much money you take home.
As the operations support manager and head of the settlements team, I work with numbers all day (sometimes I’m even counting in my sleep). Talking about pay is what I do. In this article, I’ll educate you on different pay packages so you can choose the pay schedule that works best for you.
When you’re finished reading, your next step will be to talk to your company about how you’re getting paid or to start researching pay packages at different trucking companies.
First thing first: Do companies even let you choose your pay package?
The answer is: Maybe.
Clear as mud, right?
It honestly depends on the company you’re working for or researching. Some companies let you and some companies don’t. Some companies may switch it up throughout the year depending on the market conditions. Let me explain further.
Some trucking companies allow their drivers to select which pay package works best for them. It’s an even split for companies that do and don’t allow you to choose, but it’s mostly larger companies that can offer different pay packages. The ones that don’t let you choose tend to pay company drivers cents-per-mile pay (CPM) and independent contractors percentage pay.
Keep in mind, even if you can choose your pay package, it’s not like you can switch it every other load or every other week. You’ll have to stick to one package. Your company may let you review your pay package periodically, but by no means can you switch it up constantly.
The market also factors into whether or not companies will offer you a choice. In a top-performing market, there are typically more pay package options than are available in a down market.
As the market changes, companies may adjust the pay packages they offer (if they even let you choose to begin with). They need to think about the bottom dollar and the good of the company and drivers, so they’ll usually choose to offer pay package options that benefit everyone.
That means in one quarter you can choose from both cents-per-mile (CPM) pay and percentage pay, while in other quarters you may only receive the option of percentage pay.
In some cases, the company you’re working with may grandfather you into the pay package you’re currently on. In some cases, they might not. Again, it depends on the company you’re working with.
That’s why it’s especially crucial to review your employment agreement or independent contractor agreement. Closely review the pay section to determine what pay packages they offer, how they can change and what your options are.
Related: Understanding your independent contractor agreement
Company drivers are shielded from a lot when it comes to finances. They take less of a financial risk as a company driver because they don’t have to cover truck payments, fuel costs, insurance and so on. The trucking company takes care of that.
Still, it’s important as a company driver to consider pay packages before you sign on with a company. Even if you aren’t taking as many financial risks as an independent contractor would, you still want to make money and adequately support yourself and your family.
The pay package you choose largely comes down to the type of driver you are. Do you want the biggest bang for your buck on each load (i.e., very low miles but a huge payout) or do you like to run a lot of miles?
Think of it like quality versus quantity. Some drivers are very choosy with their loads and will only take them if they’re high revenue — whether or not it requires them to drive a lot of miles.
Other drivers like to make the most of their time by running hard every day, using up their clock, running as many miles as possible and hauling load after load after load. It comes down to the quality of the loads versus the quantity of loads.
Before we go any further, remember that some company drivers are on forced dispatch and can’t choose their loads anyway. This could influence your decision.
A quality-focused driver would do better on a percentage-based pay package. If you’re only hauling high-revenue loads, percentage pay would give you a good cut. You may be running fewer miles to get these loads, so mileage pay wouldn’t necessarily make sense.
On the other hand, if you’re very miles (or quantity) driven, a mileage-based pay package would be ideal for you. You’ll be paid based on a CPM basis. Running all those miles and using up your clock will pay off.
As you now know, the market influences pay packages, which will influence which pay package you choose if given the choice. If freight rates are down, percentage pay won’t be as high. CPM pay is the way to go. If freight availability is low, you won’t be able to run as many miles. Choosing percentage pay is a better option.
Independent contractors bear all the financial burden of trucking. They have to make truck payments, pay for fuel and insurance, cover the cost of repairs and so much more. Choosing your pay package holds a lot more weight for you, as it can make or break your business.
Just like company drivers, you’ll be able to choose from two different pay packages: CPM or percentage pay. And just like company drivers, it comes down to whether you prefer quality over quantity.
Some drivers love being on the road for as long as possible. They’re the cowboys of the road; they’ll run as many miles as they can and deliver load after load. If that’s the case for you, choose a CPM-based pay package.
On the other hand, you may prefer to run as few miles as possible. You don’t care if you’re using up all your available hours — you just want the highest revenue on each load. If that’s the case, a percentage pay package will probably work best for you.
Having a good understanding of your cost per mile and how you operate will help guide your decision — as will knowing market trends.
Again, when freight rates are high, you’ll earn the highest revenue with a percentage pay package. When rates are low, CPM is the way to go.
The road to financial success is paved with smart choices, especially when it comes to pay packages. As you navigate through the maze of options, from mileage-based to percentage pay, the choice you make can significantly impact your bottom line.
Companies vary in their flexibility, with some offering pay package options while others dictate the terms. Market conditions further complicate matters, influencing the number of pay packages available at any given time.
Ultimately, your operating style and the ever-shifting market landscape determine which pay package will work best for you. High freight rates favor percentage pay, while low rates steer towards mileage-based compensation.
Remember this when you’re either talking about your pay with your current trucking company or researching new trucking companies. Make sure you have a strong grasp of the intricacies of each pay package. It’s also a good idea to find out if they offer any sort of accessorial or bonus pay.
At ATS, our company drivers don’t have to choose. We pay our company drivers using a unique pay package. You automatically make whichever pays you more on the load: CPM or percentage. That way there’s no more wondering and asking “What if I chose a different pay package?”
Want to learn more? Check out our company driver packages.