4 Common Ways to Pay Truck Drivers
Leave a CommentJust like the trucking industry itself, paying truck drivers is not a one-size-fits-all solution. Driver or carrier agreements, company set ups, and types of haul call for different arrangements. Whether you are working with company drivers on the payroll, owner operators, or carriers, it’s helpful to know your options. There are several ways to pay truck drivers in this industry, so we will cover a few of the most common and when to use them.
In This Article
1. Pay by the Mile
This is one of the most familiar ways to pay truck drivers. Drivers are paid based on how many miles they run. It boils down to a simple formula: the more miles the run, the more they are paid. Within this category, there are a few popular variations.
- Flat rate per mile – One rate for every mile, loaded or empty. This is simple and straightforward. No need to track load statuses or revenue amounts in order to calculate pay per load.
- Split rate (loaded vs empty) – You pay a higher rate for loaded miles and a lower rate for empty miles. As a result, driver pay can be more balanced in addition to giving you the ability to report on the profitability difference between hauling freight and repositioning.
- Lane based – You pay specific rates for specific lanes. Trucking software can store several different types of rate charts, which can typically auto-apply on each load. Understanding your lane profitability is a key factor in successfully setting up chart based mileage rates. You can be flexible with this. For example, you can have a chart where you pay X per mile when the mileage is between 100-200 and Y per mile when the total mileage is between 201-300.
WHEN TO USE IT
Per mile driver pay works best for OTR or longer routes where miles are the best measure of profitability and productivity. It’s often used for company drivers where loads are frequent and you are covering fuel and other expenses. This method is easy to track and understand, which can reduce disputes or confusion during payroll. Drivers are able to track their own mileage, which means they have the ability to crosscheck their pay settlements. In addition, since the more miles a driver covers means they earn more, it also has the added benefit of encouraging efficiency. However, you always want to encourage “safety first” if you use the pay per mile approach.
Utilize reporting tools to get your profitability by the mile. Not only can you analyze your revenue per mile, but you also have the pay per mile, which means you have a very straightforward formula. Any fleet size can use this pay method and get something valuable out of it.
2. Percentage of Revenue
Instead of paying by the distance metric, some fleets pay drivers a percentage of the revenue that was billed on each load. The benefit with this pay method is that the driver pay is directly tied to what the load is worth. You can set this up a few different ways.
- Straight % of the total billed revenue – For example, a driver earns 30% of whatever you bill the customer. This includes the line haul charge and any accessorials.
- Split % for line haul & accessorials – Pay x% of the line haul and y% of the fuel surcharge or other extras. Frontline Q7 supports this kind of set up so you can match your agreements exactly and the driver sees the breakdown reflected on their pay settlement.
- % based on category of equipment – Pay x% when non-hazmat loads are hauled and y% when hazmat loads are hauled. Or, pay x% for flatbed loads and y% for reefer loads.
- Lane based – Percentage based driver pay is very flexible when it comes to setting up a specific rate based on the lane. For example, you can set up a rate chart so you are paying x% for loads going from Tucson to San Diego, and y% for loads going from Phoenix to Denver.
WHEN TO USE IT
While this model can be used for company drivers, it is popular for owner operator fleets where the drivers cover their own expenses. Since owner operator and carrier pay scales with the value of each load, it keeps their interests aligned with yours. This model is also useful in an operation where the load revenue varies and you want driver pay to reflect that.
3. Flat Rate Per Load
Sometimes, simplicity wins. With this method, drivers or carriers earn a fixed dollar amount per load, regardless of how many miles are involved. It is clean, predictable, and easy to manage. However, a great amount of reporting and careful planning needs to go into this method before you start using it. You need to have an expectation for the percentages and profitability behind the scenes, even if your pay structure is not reflecting it.
This setup is especially common when paying outside carriers, but it can also apply to company drivers running consistent local or regional hauls.
WHEN TO USE IT
Flat pay makes the most sense when loads are short, repetitive, or relatively equal in effort. If you are running the same route day after day (i.e., a dedicated lane between two terminals), flag pay can reduce administrative work. As a result, you cut down on a sneaky trucking business expense, and keep things predictable for everyone involved.
4. Specialized Pay Structures
Here is where things can get more complex, or need to be more customized to the kind of freight you haul. The most common ways to pay truck drivers are not a good fit for everyone. Some fleets pay drivers based on structured rate charts, similar to how customers can be billed. These are just a couple of examples our support desk has helped to implement:
- Pay per ton-mile – First, lanes are established. Each lane could be a mileage range or city-city. Next, each lane has its own weight tier where the driver’s pay rate is stored. The rate itself could be percentage based, mileage based, flat, or a rate per ton/pound/etc. For example, when a driver hauls 30,000 pounds from Tucson to Phoenix, they are paid X per ton. When a driver hauls 42,000 pounds from Tucson to Phoenix, they are paid Y per ton.
- Percentage of a calculated base rate – Instead of using the same rate or amount as the customer invoice, there is a separate chart for drivers. The driver’s percentage rate is calculated from there. For example, a customer is charged $25/ton to calculate $x as a total freight charge. The driver’s pay runs through a 2-step process. First, calculate $24/ton to get an amount. Next, they have a specific percentage of the resulting amount.
- Split loads – When loads are dropped & hooked between two drivers, it is important to compute the pay correctly. Frontline Q7 automatically allocates the customer revenue that a percentage based pay structure is calculated on based on factors that you get to determine.
In addition to each of these examples and more, you might also have accessorials that you need to pay.
WHEN TO USE IT
This setup is ideal for specialized freight like aggregate, bulk commodities, or anything where weight and mileage both play a big role in cost. If your customer contracts are built around tariff systems, it often makes sense to mirror that logic in your driver pay. It’s not something you’d want to calculate manually, but with the right software, it becomes fully automated and scalable.
Company Driver Pay vs Owner Operator Pay
Generally speaking, you can follow a few simple guidelines when it comes to determining the pay between these two types of drivers.
Company drivers are more likely to be paid per mile per load, where the trucking company covers all operating costs.
Owner operators tend to prefer percentage based pay because their income is directly tied to load revenue. They are responsible for their own expenses, although it is common for the trucking company to initially pay for them. The owner operator is deducted for operating expenses on their pay settlements.
That said, these are not hard and fast rules. Some trucking companies offer hybrid ways to pay truck drivers. Still others customize pay structures depending on driver preference or freight type.
Take a Closer Look
If you are juggling different pay types, contracts, and rate calculations, trucking software like Frontline Q7 can save you a lot of time.
- Automatically calculate driver pay based on mileage, revenue, tonnage, or specialized rate charts or routines.
- Customize pay structures per driver or truck.
- Owner operator drivers can be set up as subaccounts under the roof of another 3rd party entity.
- Automatically allocate revenue and accessorials in split load dispatch scenarios.
- Generate clean, accurate pay settlements with audit trails.
- Integrate driver pay directly into your dispatch, payroll, and accounting workflow.
- Eliminate manual entry and reduce calculation errors.
Q7 was built to handle complex settlements while keeping you efficient. Use templates for common pay structures, build custom formulas, and let Q7 track everything.
Ways to pay truck drivers might be one of the most complex parts of running a trucking business. It doesn’t have to be painful! The right model helps you stay competitive, fair, and aligned with your drivers’ needs. With flexible trucking software doing the heavy lifting, focus less on math and more on keeping the wheels turning. Our training and support team has been helping trucking companies take control of the pay settlement process since 1992. Reach out to us today so we can learn about your driver pay routines.
