Guides
Moving Company Profit Margin: Break-Even Formula
Moving company profit margin depends on contribution per move, fixed costs, and seasonal crew-days; use these formulas to find your break-even point.
What to take away
- Moving company profit margin depends on contribution per move and fixed costs; these formulas show the break-even point, not an industry-wide percentage.
- Break-even for a mover is a count of paid crew-days per month, not a revenue figure. Work it in crew-days and the answer tells you what to sell.
- Contribution per move is the price less the loaded labor, the truck's running cost, and the materials, in that order of size.
- Fixed cost is mostly the yard, the insurance, the office, and the trucks sitting idle in the off-season. Those months, not the busy ones, decide the year.
- Two jobs with the same price can have opposite margins if one had stairs and a long carry that the estimate did not charge for.
The variables
Write these down for your own operation before reading further. The derivation below is in letters, and it only becomes useful when your figures replace them.
Variables to record
- P: price of a move
- L: loaded labor cost per crew-hour
- h: crew-hours the move took
- K: truck running cost per hour
- M: materials consumed on the move
- F: fixed cost per month
- d: paid crew-days sold in month
| Symbol | Meaning | Where it comes from |
|---|---|---|
| P | Price of a move | The quote, after the survey |
| L | Loaded labor cost per crew-hour | Wages plus payroll burden, from payroll |
| h | Crew-hours the move actually took | The job sheet |
| K | Truck running cost per hour | Fuel, maintenance, and tires, from the truck log |
| M | Materials consumed on the move | Boxes, pads that were not returned, tape |
| F | Fixed cost per month | Yard, insurance, office, software, loan payments |
| d | Paid crew-days sold in the month | The dispatch calendar |
Contribution per move
Contribution is what a single move leaves behind to pay for the fixed costs:
Contribution per move
C = P - (L x h) - (K x h) - M
h appears twice: labor and truck time
Missed stairs take two bites from margin
Access hours must be charged
C = P - (L x h) - (K x h) - M
Notice h appears twice. Every hour the survey did not anticipate costs both labor and truck time. An estimate that misses a flight of stairs takes two bites from the same margin.
That is the arithmetic behind the advice in how to price moving company services for a fair margin: access hours must be charged, because they are paid twice.
Break-even in crew-days
Convert to the unit dispatch actually manages. If an ordinary crew-day yields contribution C on average, the month breaks even when
d x C = F
so the crew-days required are d = F / C. That is the number to put on the wall of the dispatch office. If the yard sells fewer paid crew-days than that in a month, the month lost money regardless of how busy it felt.
A second truck changes both sides. It raises F through the payment and the insurance, and it raises capacity, which is only worth anything if the expansion and market guide test for demand is passed. Capacity that is not sold is a fixed cost with nothing against it.
The off-season problem
Household moving peaks in summer and at the end of each month, because leases and closings cluster there. F is paid every month; d falls in the months when nobody is moving. Break-even for the year is therefore not twelve times the monthly figure. It is:
sum over months of (d x C) >= 12 x F
Busy months must earn a surplus large enough to cover the quiet ones. A business that prices summer work at a margin that only just covers the summer will not survive February.
Pay policy across the two seasons, and how much of the crew is kept through winter, is worked through in the hiring and training guide.
Where L is understated
Loaded labor is more than the hourly wage. It includes payroll taxes, workers' compensation premiums, paid time off, and the unpaid hours a crew spends loading pads in the yard before the first job.
If L is measured from the wage alone, every contribution figure is too high and the break-even count is too low. Check the wage component against the Bureau of Labor Statistics occupational wage tables for your metropolitan area, which give a published reference for what movers and drivers are paid, and then add the burden your payroll records show.
Checking the margin you advertise
Margin claims, "no hidden fees" claims, and "lowest price" claims on a price list or website must be ones you can support. The Federal Trade Commission's guidance on advertising for small businesses applies to movers as it does to anyone else: claims must be truthful and substantiated.
The stage sheets and job sheets described here are the substantiation.
The records that make the arithmetic possible
None of the variables above can be filled in without records. The IRS explains in what kind of records a business should keep that the system is the owner's choice provided it clearly shows income and expenses.
A job sheet per move recording h, M, and the crew, filed with the invoice, is the minimum that lets C be computed at all. Costs specific to authority, permits, and compliance filings belong in F and are laid out in the licensing and compliance guide.
What the pillar adds
This page sets out the contribution and break-even formulas. The moving company pricing and profit guide sits above it and explains the estimate types, the tariff basis for long-distance work, and how the choice between hourly and flat pricing changes who carries the risk in C.
Common questions
What margin should a moving company make?
There is no single target that applies to every mover. Your margin depends on your fixed costs, season, and local market. The formulas here establish break-even; they do not provide an industry-wide margin or recommended percentage.
Should I include the owner's own time in L?
Yes, if the owner works on the truck. A business that only breaks even because the owner is unpaid labor has not broken even.
Why work in crew-days rather than revenue?
Because revenue hides h. Two months with identical revenue can have very different labor hours, and the one with more hours made less. Crew-days sold against crew-days paid is the ratio dispatch can actually manage.
Does storage change the model?
Storage-in-transit adds a recurring line with a different cost structure, mostly warehouse space and handling in and out. Keep it on a separate sheet so it does not blur the move contribution.
