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Over the years I have been privy to many different types of pay structures including sliding scale mileage, flat mileage, hourly, and percentage of both ton gross and linehaul revenue gross.  Though most would contend that hourly would make the most sense running out here in CA, where daily traffic builds a whole different level of patience, the fairest pay scale I’ve experienced was total linehaul revenue percentage.  This is the only way I pay my current owner operators as well, not only because it is fully transparent, but also because it builds a sense of trust in that my company is only making money if they are making money.

With many companies now following suit and offering percentage pay as their platform of choice, it is becoming more and more important for drivers to do a true “apples to apples” comparison of pay packages when scoping out who they want to drive for.  It is all too often I see posts boasting, “we offer the highest percentage pay” or “keep the most percentage of anyone” coming across hiring pages and social media. What you need to remember is the simple math behind it all and that a lower % of a higher gross is always going to be better than a higher % of a lower gross.  In other words, it makes a lot more sense to drive for “Company A” that pays 80% of $1000, rather than for “Company B” that pays 85% of $900 on the same exact lane.  

Another thing to include in your “apples to apples” comparison are the back-end benefits. Sure “Company B” above with their higher percentage may be promising you a higher percentage, but what exactly does that 5% more cost you?  Does that 5% premium come with you having to bill and invoice your own loads, or possibly pay pump price for fuel instead of having a $0.40+ cent per gallon fuel card like “Company A” was offering?  Perhaps you will have to file your own IFTA, or take care of some other monotonous tasks that “Company A” was going to take care of.  Is insurance available at a discount through “Company A”, while the higher percentage “Company B” leaves you with no option but to search for your own and just name them on your policy?

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As you can see, when you begin to scratch the surface into what percentage based pay can actually include or exclude, asking the right questions can make a world of difference.  I made absolutely certain when I started adding drivers that I not only offered a pay scale on the top of the industry average, but that I included top pricing and lots of back-end benefits to make it a “total package” that they would be happy with year after year.  I didn’t want to be the company that just went out and boasted a large percentage and didn’t deliver on the actual goal of truly higher pay!

Not only do I negotiate prices to the best levels possible, regardless of having to pass on some less than lucratively priced lanes and loads, but I also make sure to include many other perks that a lot of small fleets don’t take the time to offer.  When I put together a compensation program for the first time, I wanted to make sure I offered everything I could including IFTA filing, settlement deducted plates and insurance, reimbursed scales/tolls/overnight reserved parking, a settlement deducted fuel card with a substantial discount and no worries in the end that their pay wasn’t going to be direct deposited every Friday!  This enables them to not only focus on the safe operation and maintenance of their equipment better, but also helps make sure that their home time was truly spent at home with loved ones doing what they want to do and not having to take care of some of these other mundane essential business tasks during that time instead.

Don’t be led astray in your quest for the best paying company by flashy campaigns promising the best percentage without first doing your homework.  If you don’t dig a little deeper into what someone is offering other than just their base percentage, then you might as well be comparing apples to oranges!  Make sure you get the most for your percentage rate and not just the best percentage rate at face value.  After all, 100% of nothing is still nothing!

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Jimmy Nevarez

Jimmy Nevarez is the Owner/President of Angus Transportation, Inc., based in Chino, California.  Jimmy pulls a 53' dry van hauling general dry freight for his own small fleet, operating on its own authority throughout all of Southern California and Southern Nevada.

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