Fleet cost management

Get a demo Learn more⁠

Keeping fleet costs under control is one of the most important jobs for a fleet manager. If you’re looking for ways to reduce operational expenses, you’ve come to the right place. On this page you’ll find a series of practical guidelines, from differentiating between cost types to saving strategies that can help you run a more efficient, profitable fleet.

Budget planning and fleet costs

Maintaining good budgeting practices is key to running an efficient fleet. So, what is your budgeting process like? How did your fleet perform last year—and what parts of the business could be improved this year? Your annual budget should help you pinpoint where greater efficiency could boost your bottom line.

Whether you go with incremental budgeting, zero-based budgeting or a hybrid of these two methods, you need to know what you’re aiming for. After all, reducing operational costs requires having clarity on income vs. expenses. Want to know more about fleet budgeting? Read our post on creating a simple fleet budget, where you can download a free Excel budget template.

Direct vs. indirect fleet costs

Getting better control over fleet costs starts with understanding which costs are fixed and which ones are variable. Why? Because it will inform how you view and manage expenses. To illustrate the point, let’s break down these two cost types.

Direct costs

These costs largely revolve around your vehicles. You wouldn’t have such costs without your vehicles (and you wouldn’t be able to do business without the vehicles, either). Here, you want to think about fixed direct costs and variable direct costs:

Fixed direct costs cover things like vehicle purchases/leasing and depreciation. Operational costs like employee salaries and insurance also fall under this category. As the word “fixed” implies, these costs are relatively unchanging during your operating year.

Variable direct costs span everything from fuel consumption and maintenance to fines and tolls. You can’t really predict these costs, but they’re a necessary part of your daily operations.

Indirect costs

These expenses aren’t so tied to your vehicles. They’re more general overhead expenses, like business administration and office equipment. It’s important to calculate them as they factor into your overall operations.

For a more detailed breakdown of fleet cost types, see our glossary page on costs.

Insurance and liability

Insurance and liability truly deserve separate consideration, since mitigating risk is a major aspect of cost control. Here are the main issues to keep in mind:

Comprehensive insurance coverage protects your business against financial losses from vehicle damage, theft and liability claims.
While driver training isn’t itself an insurance cost, drivers are your frontline to road safety and healthy vehicles. Drivers who are well trained in safety protocols are less likely to cause accidents, which can drive insurance premiums up and damage your business reputation.
Some insurance providers offer discounts for proven achievements in safety. If your fleet is consistently improving road safety, you could see significant savings on your premiums.

Cost reduction strategies

Now that we’ve outlined budgeting process and defined key operating costs, it’s time to figure out how to actually save money. Looking for the simplest way to cut costs? Use a fleet management system that automates repetitive processes and provides you with cost-cutting insights.

Here’s a quick sample of what you can do with a fleet management solution like Webfleet:

Optimise routes: Professional navigation and efficient order scheduling help your drivers get to their destinations faster and safer. By keeping your drivers on the best routes, you can also avoid traffic jams and other fuel-guzzling situations on the road.

Monitor driving behaviour: With our OptiDrive 360 tool, it’s possible to analyse driver scores historically and in real time. This tool provides drivers with in-cab feedback on their performance, empowering them to improve their driving in the moment.
Make compliance simple: Get notified when your drivers are nearing a breach so you can take immediate action and avoid penalties. You’ll also help ensure that drivers take their breaks and rest periods, which is key to road safety.
Automate maintenance tasks: Set up notifications to remind you when maintenance is due. In addition to keeping vehicles roadworthy, regular maintenance is essential to preventing unplanned—and costly—repairs.