In most cases, truck drivers have two career paths to consider: become a company driver or be an owner operator. Each career path has its pros and cons – it just depends on what you’re looking for in a trucking career.
In this quick guide, we’ll go over company drivers, owner operators, and which option might be best for you and your situation.
What Is a Company Driver?
A company driver is an employee of a trucking company that drives a company truck. Company drivers are paid by the mile or the hour, and they typically receive benefits like any other employee.
Paid By the Mile vs. Paid By the Hour
So, is it better to be paid for every mile you drive, or does it make more sense to be paid for each hour you work? The short answer is it depends.
In general, shorter haul loads don’t offer enough miles to make per-mile payment worth your while. For example, if a load is only 97 miles each way, you’re only running about 200 miles per day. If you were paid by the mile, that’s less than $500 per week!
Most drivers aren’t going to work for only $500 per week. That’s why drivers who run local freight are typically paid by the hour. We call these “hourly runs.”
Guys and gals that are on the road doing 500-600 miles per day prefer a per-mile rate because it’s going to pay them more than an hourly rate.
You can really get in the weeds with the math here, but the gist is if you’re hired for a local job, it’s probably going to be an hourly position. And if you’re hired as an over-the-road driver, you’re probably going to be paid by the mile.
Sidenote: There’s a little bit of a push in the trucking industry to pay all drivers by the hour. Some believe paying drivers for every mile they run encourages speeding. This isn’t a massive push by any means – more of a gentle nudge if you will.
In our opinion, this line of thinking isn’t going anywhere because today’s technology is so advanced. For example, there are truck devices that don’t allow you to speed, even if you wanted to.
What Benefits Do Company Drivers Get?
Company drivers are employees, and as an employee, you receive valuable benefits like contributions towards your health insurance, workers’ compensation, and even access to a 401(k) retirement plan if your employer offers it.
Company drivers also have the advantage of reliability. In general, you know what your earnings are going to be (or can be), and you don’t face any unexpected expenses. Company drivers are not responsible for paying for their truck, truck maintenance, or fuel.
Here are some major things company drivers don’t have to worry about:
Fuel costs going up and down
No earnings if your truck breaks down (you get breakdown pay)
No earnings if your loads are too spaced apart (you get layover pay)
No earnings if you have to deadhead to get a load (you are paid by the mile or hour)
That’s all pretty reassuring to those who prefer the predictability and reliability of a steady job.
How Much Can You Make As a Company Driver?
Company drivers typically make around $75,000 annually. This is all dependent on your experience and the distance you’re willing to drive. Regional positions pay less, for example, and drivers with a lot of experience are paid more.
Average hourly rates can span from $15 to as high as $25 per hour. The biggest factors here are where you’re driving and any endorsements you have. For example, drivers up north are paid on the higher end, and drivers with HAZMAT and Tanker endorsements are paid more.
As a company driver, the more miles you run or the more hours you work, the more you’ll obviously make, but you are capped to a certain extent. It’s unlikely you’ll ever earn more than about 52 cents per mile driven, and you can only work so many hours in the week.
Additionally, some companies won’t want you to get into overtime, and some driving jobs only pay straight time no matter how many hours you work.
Typical company drivers can expect to make around $75,000 per year. Some of our very own Freight X company drivers are even earning upwards of $90,000 per year, so it really can depend.
Drivers with a lot of motivation who are out on the road more often tend to earn on the higher end of that range, while drivers who prefer to have more home time will be on the lower end. Needless to say, the pay is fantastic, especially since you don’t need any advanced degrees.
If you prefer predictability and don’t want to take on the risks of owning your own business, being a company driver is an excellent career path for you.
What Is an Owner Operator?
An owner operator is an independent business owner that teams up with a trucking company for back-office support. Owner operators lease or own their own trucks. If the owner operator is leasing the truck, they’re referred to a lease purchase owner operator.
In any case, when you’re responsible for your own equipment, it means you take on the risk of any business owner. On the bright side, you are entirely independent and have the pride of being your own boss.
Are Owner Operators Considered Employees?
Owner operators are not considered employees. In most cases, owner operators are 1099 independent contractors.
Since owner ops aren’t employees, it should be said that taxes are not automatically taken out of their earnings, so please, please, please! save a portion of your income for tax time. You do NOT want to be like many owner operators who owe the IRS and don’t have the ability to pay them.
What Do Owner Operators Have to Pay For?
Owner operators are running their own businesses, and while they make a lot more money on the freight they haul, they also have a lot more expenses. Some expenses you can plan for, while others can come out of the blue.
The main expenses of an owner operator include:
Truck maintenance costs
Truck breakdowns
Health insurance
Liability insurance
Other Unforeseen business expenses
Sidenote: Most trucking companies don’t supply health insurance for owner operators. There may be a few exceptions, but in general, that’s the standard.
While all of these expenses can definitely add up, there’s a reason why truckers decide to become owner operators, and that’s the income!
How Much Can You Make As an Owner Operator?
Owner operators have the potential to make significantly more money than a company driver. Owner operators typically make between 70-80% of the load.
As an owner operator, you have the power to choose your own destiny. An owner operator’s annual earnings can range from $78,000-$156,000.
If you’re out on the road diligently, you’ll be on the higher end of the range, and if you continually turn down loads, you’ll be on the lower end.
Don’t forget that owner operators are responsible for their own business expenses, but on the bright side, expenses are tax-deductible. You just have to keep track of them!
What Do Trucking Companies Offer Owner Operators?
You’re making about 82% of the load, so why are you giving up 18% to the trucking company you’re running under?
That can depend on the trucking company, so you really want to do your homework here. You want to be sure you’re partnering with a company that is supporting your growth and is offering top-of-the-line trucking solutions. Don’t give up that percentage to just anyone!
Here at Freight X, we offer best-in-class software, great customer relationships, a shop with incredibly skilled mechanics, and so much more. In fact, here’s a quick sampling of the benefits we provide to owner operators:
Experienced in-house mechanics that are paid by the hour, not commission
Best-in-class tech – Dossier, McLeod, and Transflo
More opportunities – drop and hook, trailer pools, customers
Free subscription to DAT and Truckstop
Great dispatch and load planning support from staff with decades of trucking experience
Fueling location optimization to save you money on fuel expenses
We file your IFTA
ELD provided and monitored
These are just some of the highlights of what we offer to owner operators, but as you can see, that’s a ton of value. We’re able to offer all of this because of the volume we do.
However, we still maintain that small, family-owned company feel. When you call us, you’ll be greeted by your name, not a number. It’s truly the best of both worlds!
How Much Does an Owner Operator Truck Driver Make After Expenses?
Expenses are pretty unpredictable – as are many aspects of trucking! However, many trucking companies (including Freight X) assist owner operators by offering optional maintenance accounts.
You can request to automatically put in part of your earnings into the maintenance account until it reaches an amount you’re comfortable with. That provides you some insurance, so to speak, if you run into any major maintenance or breakdown issues.
Once your maintenance account has a good amount of padding in it, you don’t have to worry about unforeseen expenses coming out of your check.
Your expenses and income are going to range greatly, but we know you probably want to see some kind of example, so we came up with one.
Assuming you run 100,000 in a year, you should plan for about $74,500 in annual expenses. Also assuming you get $2 per mile, which is very reasonable, you would make $200,000 that year.
In sum, an owner operator who runs 100,000 miles annually can expect to make about $125,500 after expenses. And again, expenses are tax-deductible.
Here’s an example of what expenses look like if you run 100,000 in a year:
$24,000: Fuel (at Freight X, you get a fuel card with a fuel discount)
$1,000: General administrative expenses (accounting, for example)
Fuel is going to be your largest expense, but it’s not as bad as it sounds since it’s factored into the rate of the load. Owner operators at Freight X regularly bring home between $2,000-$3,000 per week, and that’s after fuel expenses.
Owner Operator vs. Company Driver
One option isn’t inherently better than the other – it just depends on your personality and which option fits your needs the best at this time.
You’re probably better suited to be a company driver (for now) if you agree with the majority of these statements:
I’m relatively new to truck driving.
I’m not financially prepared to be on the hook for tractor repairs or maintenance costs.
I like predictability.
I don’t generally like to take on risk if I can help it.
I’ve never really had the desire to own my own business.
On the other hand, you might be better suited to become an owner operator if you agree with the majority of these statements:
I’ve been driving trucks for several years (or more).
I’m financially prepared to handle tractor repairs or maintenance costs.
I don’t mind taking on risk when there’s a potential for upside.
I’ve always wanted to own my own truck.
I’ve always wanted to start my own business.
If you want to be an owner operator but you’re not financially prepared for unexpected costs and you don’t know how to own your own truck, consider becoming a lease purchase owner operator.
If you have any questions about becoming a company driver or owner operator here at Freight X, be sure to visit our Become a Driver page. If you think being an Owner Operator with us is right for you, check out our Owner Operators page.
You can fill out the form there to get in touch with us, or just give us a call at 352-629-2042!
In order to get started as an owner operator, the first step is to buy your own truck. However, that’s easier said than done. A lot of times, dealerships won’t offer financing – even if you have perfect credit. That means you can’t get a loan on a truck, so your only option is to pay cash for it.
Do you have $50,000+ in cash sitting around? Not many do.
That’s why many drivers turn to their trucking company for a lease-purchase opportunity. You’re still an owner operator – you’re just leasing your truck until you complete the payments and it’s yours.
I’ve structured the lease purchase contract here at Freight X, and I’ve done enough of these deals to hear about what other companies are doing.
It seems to me that many trucking companies are ripping off truckers who don’t understand some of the contract details. That leaves a lot of truckers with a bad taste in their mouth, and just hearing the words “lease purchase program” turns them off.
In order to save you from getting burned by a bad lease-purchase agreement, I’ve come up with 7 of the most common things you should avoid in a lease-purchase contract.
Of course, we’d love to strike a deal with you if you’re looking to become an owner operator, but no matter who you go with, I want to make sure you’re not getting screwed over.
1. Run away from balloon payments at the end of the contract.
Some lease purchase agreements have what’s called a balloon payment that’s due at the end of the contract period. This recently happened with a driver who came to us in the middle of their lease-purchase contract with another company.
Some lease purchase agreements have what’s called a balloon payment that’s due at the end of the contract period. Avoid this, or at least make sure it’s a reasonable amount that you could actually afford.
He was paying around $600 per week for nearly 5 years, and the final balloon payment was $50,000 at the end. That makes absolutely no sense – that truck isn’t even worth $50,000! Luckily, his maintenance account had $25,000 in it, and they let him use that balance towards the balloon payment. He came up with the other $25,000.
Most people aren’t in his position and wouldn’t be able to afford that. If that were the case, the company would send you into another lease, and it just goes on and on. You’d never end up actually owning a truck!
At Freight X, we have no balloon payment. If the company you’re talking to has a balloon payment, it better be something reasonable that you think you could come up with.
2. Make sure the maintenance account doesn’t have too many restrictions.
What’s the maintenance account going to look like? We hold between 12-20 cents per loaded mile and put it into a maintenance account for you. It’s your money, but we hold it there until the lease agreement is over so that you have money available to make necessary repairs.
And that makes a lot of sense. Think about that – if I was
driving your car, you’d want to hold something back to fix it. For example, in
a worst-case scenario, you could walk away from it or the car could break down
and you may not have the money saved to fix it.
Once you own your truck, it’s entirely up to you whether you want to keep the maintenance account going or not. Smart owner operators still do a maintenance account because they know they won’t save that money on their own. They save 10-12 cents per mile until there’s a good chunk in there, and then we’ll pause it for some time until it’s needed again.
You may not have a credit card or the cash to fix an issue in the middle of the night if you break down, so that maintenance account is a little insurance for you. I encourage it, but it’s not mandatory once you own your truck.
So, when you’re in your lease-purchase agreement, I let you use that maintenance money for any repairs on the truck – other places have way more restrictions on that.
When you’re in your lease-purchase agreement, I let you use that maintenance money for any repairs on the truck – other places have way more restrictions on that. Make sure you understand that maintenance account before signing!
For example, here are some questions you want to ask about the maintenance account while you’re in the lease purchase contract:
Am I allowed to use the money in the maintenance
account to pay off the balance of my truck?
Once I pay off the truck, is it mandatory to
have a maintenance account or is it my choice?
Do I have to get maintenance done at the company
shop, or can I get it done anywhere I want to?
Some guys say, “What if my maintenance account gets too big?”
I say it can’t get too big, because if you end up with more money in your account then you owe me for the truck, we just sign the truck over and it’s yours.
3. Make sure you have the freedom to go to any shop to get maintenance done.
At Freight X, you don’t have to get your truck maintenance done at our shop. However, it can be advantageous to you to do so, and here’s why.
If you take your truck to an outside shop, their goal is to make sure they charge you for everything you may possibly need. Their job is to make money fixing your truck.
At our shop, our job is to get you back on the road as quickly as possible and for as little money as possible. It doesn’t mean we sacrifice quality or safety – things that are necessary have to be done – but our goals are aligned.
In a dealership, they’ll go, “Well, it’s not re-genning, so
you’ll need a new DPF filter, a DOC, possibly your doser isn’t working… and
then we’ll need to run it through a re-gen to see if that fixes your problem.”
That right there is an $8,000-$10,000 bill.
At our shop, our job is to get you back on the road as quickly as possible and for as little money as possible. It doesn’t mean we sacrifice quality or safety – things that are necessary have to be done – but our goals are aligned.
We would attempt to run it through a re-gen and see if there were any codes that came up during that process. We’d investigate those codes, and try to determine what the actual source of the issue is. It could be a wiring issue, a sensor not reading correctly… it could be a simple $1 fix. Either way, we’ll solve the root of the problem.
In defense of the dealerships, they’re going to throw parts
at the problem hoping that they’ve hit the real problem with one of them. They
don’t want you to come back to their shop and have them rework something
because it isn’t fixed. I can’t say that’s totally true, but that’s what I’d
say in defense of them. Maybe they aren’t all crooked, so that’s a possible
explanation.
In any case, if you come to our shop, we have your best interest in mind, and we also charge a lot less per hour than outside dealerships. We charge $80 per hour whereas outside dealerships charge anywhere from $110-$130 per hour.
No mechanics are perfect. We all know that. Sometimes, you just don’t know. Your truck acts funky on the road, but when you bring it in, it stops acting funky. It just happens. But we have a higher success rate than outside dealerships – that’s for certain.
Another thing to take into consideration is that we’re just easier to work with. Here’s an example.
I had a truck the other day where the blend door wasn’t operating correctly. We tested the controller and found that it was likely the problem. We replaced it, and it didn’t fix the problem. Turns out it was the blend door actuator, which was a much more expensive fix. I didn’t charge the owner operator for the controller in that scenario.
I’ll stand behind that and say, “Well, we tried to fix the cheaper thing first and it didn’t work.” An outside dealership would charge you for both.
In any case, if our shop was terrible, I would want the option to go somewhere else. So that’s the case in our lease purchase agreement. I think our shop is awesome, but you do have the freedom to go anywhere you want.
You don’t want to be limited to the company’s shop, especially if it’s not great.
4. Ask if you’re allowed to pay the truck off early.
Are you allowed to pay the truck off early? We have a clause in our contract where after half the payments, you’re more than welcome to pay the truck off early.
Other places require you to stay with them the whole time.
Paying off your truck early allows you to save on interest.
We have a clause in our contract where after half the payments, you’re more than welcome to pay the truck off early.
Additionally, if the company’s not treating you fairly, not giving you loads, or not keeping you working, you might want to pay off the truck and go somewhere else.
If I was an owner operator, I’d be asking a ton of questions
and would be a bit apprehensive because of how many drivers have come into my
office with a bad history of lease purchase programs. They come in and say
either they’ve had a terrible experience, or a friend has.
The general consensus is that whenever you get close to paying off your truck, they stop giving you loads. We obviously don’t do that, but some places do.
I’m not in the business of leasing trucks. I’m in the
business of running freight. I have 3 choices when it comes to a truck – I can
sell it, trade it in, or lease it to someone and give them a start at their own
business. It makes me feel good to play a part in that and have a new business
partner. So why would I stop running freight when that’s my primary goal here?
At the end of the day, you don’t want to be stuck in a situation where you’re stuck not making money, so just make sure you have the option to pay it off early.
5. Don’t go for really long leases.
Some drivers like a higher payment so that they can be done with it sooner, while others prefer a lower payment to help with cashflow. We’re flexible and are proud of it!
Like I mentioned before, one of our drivers came to us from another company on a 5-year lease. In my opinion, that’s just too long to be leasing a truck. You want to actually own it at some point!
We structure our lease-purchase contracts to be between
2-3.5 years long depending on what you want your weekly payment to be.
A typical weekly payment is $400-$500 per week, which just depends on the value of the truck. However, we can play around with the length of the contract to get that payment where it needs to be for you.
Some drivers like a higher payment so that they can be done
with it sooner, while others prefer a lower payment to help with cashflow.
We’re flexible and are proud of it!
6. Some companies pay you a smaller percentage if you’re leasing a truck.
I’ve heard that a lot of companies pay a smaller percentage
of the load to a lease-purchase driver versus an owner operator. We don’t feel
that’s right.
You’re doing the same amount of work, you have the same maintenance, the same costs… we pay lease-purchase drivers the same percentage we pay owner operators. The only difference is you have a truck payment to make.
7. Don’t overpay for the truck!
This may sound obvious, but I see it all the time and it’s absolutely shocking to me: the purchase price of the truck ought to closely match the market value of the truck.
I’ve seen a driver sign a lease agreement for a 2013
Freightliner for $120,000. It should’ve been $50,000-$60,000.
Obviously, the price will depend on the condition, the
mileage, is it automatic or standard, does it have an APU… but anything that’s
exorbitantly high like that is a bad deal!
Let’s put it this way: a stripped down 2019, brand new, 0
miles… you could buy that for $120,000, you know?
We are extremely reasonable. For example, we just bought a truck for $72,000 and lease purchased it for $72,000. Apparently, that’s unheard of, but not here at Freight X.
And don’t forget that there’s no credit check – we just give you the keys, you sign the lease agreement, and you start driving. A dealership isn’t going to do that.
At the end of the day, our goal at Freight X is to be business partners with you. That’s why we are so fair and transparent with our lease purchase agreements, and we want to ensure you’re as successful as you can be.
Thanks for reading, and be sure to leave a comment below if you have any experience lease-purchasing trucks!
ABOUT US
Freight X, LLC is a transportation company with terminals in Georgia and Florida. We run freight of all kinds and have the capacity to run reefer or flatbed loads. We are always recruiting new drivers, so please contact us if you’re interested in joining the team.
