When entering the truck driving profession, drivers can choose between two primary career paths. They can either seek employment with a carrier or work as owner-operators. While the former option provides stability and security, the latter can offer greater earning potential and the freedom to manage one’s workload and schedule.
Many drivers prefer the owner-operator route due to the flexibility and financial benefits. But if drivers want to make the most of this opportunity, they must know how to negotiate an owner-operator salary. This guide will help prospective owner-operators do precisely that.
How Does an Owner-Operator Make Money?
Owner-operators make money in a manner similar to drivers who work for major carriers. Both groups pick up loads and drop them off at their destinations, and are then compensated at a per-load or per-mile rate.
Owner-operators share very little of their earnings with other entities. By contrast, drivers that work for carriers are paid after the company’s operating expenses are deducted.
Although owner-operators generally receive a much more significant portion of a load payment, they must use these funds to cover fuel, vehicle maintenance, insurance, and other business expenses. If a driver does not negotiate a fair owner-operator salary, they will likely not earn enough money to make a profit.
7 Steps for Negotiating Higher Rates
One of the many perks of being an owner-operator is that you have the freedom to negotiate your own load rates. You can maximize your owner-operator truck driver salary by becoming a savvy negotiator.
Step 1: Be Prepared
Doing a little research will pay off when it comes time to negotiate a load rate. At the very least, you should know the current fuel costs and shipping rates for the type of freight you haul. For example, if the average rate for flatbed shipping is $3 per mile, you can use this figure as a starting point for your negotiation.
Step 2: Be Assertive
Always be firm when negotiating a load rate while also showing due respect to your client, especially if it’s a company that you work with regularly. Explain the value of your services and highlight your qualifications, relevant past experience, and knowledge of the profession or even a specific market you’re servicing. Making a good impression will incentivize the client to pay you your desired rate or at least meet you halfway.
Step 3: Use the Right Load Boards
Load boards are an excellent tool for finding loads of freight. You can use these boards to broker loads, create a steady revenue stream, and avoid logging too many deadhead miles. Browsing load boards can also help you better understand current market rates.
When selecting a load board, choose one that features the type of freight you haul. For instance, if you primarily haul flatbed freight, you should not use a load board that focuses on LTL and truckload shipments. Instead, you should find a load board geared toward flatbed drivers.
Step 4: Understand Spot Market Rates
Spot market rates are one-time costs of hauling freight. These rates fluctuate based on fuel costs, demand for shipping services, weather conditions, and driver availability.
Understanding current spot market rates will help you become a better negotiator. When a shipper attempts to sell you at a below-market rate, you can use spot market data to negotiate a fairer price for the load.
Step 5: Leverage Technology
During negotiations, it is hard for shippers to argue with hard data. With that in mind, we recommend using a transportation management system, electronic logging device (ELD) with analytics software, or a similar device to calculate your operating costs.
You can present this data to shippers when they attempt to undercut you on freight rates. If you can demonstrate that a particular bid will not even allow you to break even, shippers will be much more likely to up their offer.
Step 6: Build Relationships
One less obvious way to secure a solid owner-operator salary is to focus on building strong relationships with shippers and brokers. If brokers trust you and are satisfied with the service you provide, they will be more apt to pay you a higher rate. Conversely, if a broker is unfamiliar with you, they may attempt to lowball you in order to minimize their financial risk.
Step 7: Don’t Get Discouraged
One of the most important things to remember when negotiating a rate is to not get discouraged. No matter how good of a negotiator you are, you can’t win them all. Occasionally, you will encounter stubborn brokers who refuse to budge from their original bid, even if the figure is below current market rates.
When this occurs, simply move on and start looking for other opportunities. The trucking industry never stops, which means there will always be another load or better deal down the road.
Use Load Boards for Truckers
While the above tips can help you generate a substantial owner-operator truck driver salary, load boards are your most valuable asset. You can use these platforms to broker loads, compare load rates, and maximize your owner-operator salary.
The challenge is finding the best load board for your skill set. Fortunately, FreightWaves Ratings can help with that. Check out this guide to the seven best load boards for truckers and start generating more revenue fast.
With hard work and a great long-term strategy, you can lock down a high owner-operator salary. With that being said, most high-paid owner-operators have other drivers working for them.
Owner-operators need to make a certain amount per mile to net a good profit on a load. Owner-operator per-mile earnings typically range from $2-3, depending on what they are hauling and other considerations.
Oversized and hazardous material loads typically come with the highest rates. Some shippers will also pay a premium for last-minute orders of standard flatbed or LTL freight.