Per-Mile vs Percentage Driver Pay: Which Is Better?

Per-Mile vs Percentage: Quick Overview

Choosing between per mile vs percentage driver pay is one of the most consequential decisions a fleet owner makes. The pay structure you select directly impacts driver satisfaction, your ability to recruit and retain talent, your cost predictability, and ultimately your profitability. Both models are widely used across the trucking industry, and neither is universally superior. The right choice depends on your operation's freight mix, lane consistency, fleet composition, and the type of drivers you employ or contract with.

Per-mile pay gives drivers a fixed dollar amount for every dispatched mile they drive. Percentage pay gives drivers a defined share of each load's linehaul revenue. Each creates different incentive structures, different cost dynamics for the carrier, and different income experiences for the driver. This guide breaks down both options in detail, compares them side by side, introduces flat rate as a third alternative, and provides specific recommendations based on fleet size and freight type. For a comprehensive overview of all pay structures, calculations, and deduction handling, see our complete guide to driver settlements.

Side-by-Side Comparison Table

Before diving into the details, here is a high-level comparison of the key differences between per-mile and percentage pay:

Per-Mile Pay: Detailed Breakdown

Per-mile pay is the most straightforward pay structure in trucking. The driver earns a set dollar amount for every mile driven on a dispatched load. For a step-by-step walkthrough of the calculation process with real numbers, see our guide to calculating per-mile settlements.

Advantages of per-mile pay:

• Predictable carrier costs — You know exactly what each load will cost in driver pay before the truck leaves. A 1,200-mile load at $0.55/mile always costs $660 in driver pay, regardless of what the load pays. This makes budgeting, quoting, and margin analysis straightforward.
• Simple to calculate and explain — Drivers easily understand the math: miles times rate equals pay. There is no ambiguity about how earnings are determined, which reduces settlement questions and disputes.
• Consistent driver income — As long as the driver is running miles, their income is steady and predictable. This attracts drivers who value income stability over upside potential.
• Works well for dedicated operations — If your fleet runs the same lanes repeatedly with consistent mileage, per-mile pay creates a clean, efficient compensation model with minimal settlement complexity.

Disadvantages of per-mile pay:

• No load value incentive — Drivers have no financial reason to prefer a $3,500 load over a $2,200 load if the mileage is the same. This can create friction when dispatchers need drivers to accept lower-paying but operationally necessary loads, or when they want drivers to be enthusiastic about premium freight.
• Short, high-revenue loads are undercompensated — A 200-mile load paying $1,200 only generates $110 in driver pay at $0.55/mile, even though the revenue per mile ($6.00) is exceptional. Per-mile drivers may resist short loads, preferring to chase long-haul miles instead.
• Requires manual rate adjustments — Per-mile rates do not automatically adjust with freight market conditions. When spot rates rise 20% during peak season, your drivers earn the same per-mile rate unless you proactively increase it. This can lead to driver dissatisfaction and turnover during strong freight markets.
• Deadhead policy adds complexity — You must decide whether to pay for loaded miles only, all miles, or a reduced rate on empty miles. Each approach has trade-offs that affect driver satisfaction and carrier costs.

Percentage Pay: Detailed Breakdown

Percentage pay gives the driver a defined share of the gross linehaul revenue for each load. This is the dominant model for owner-operators and lease-purchase drivers, and some carriers also use it for company drivers.

Advantages of percentage pay:

• Perfect incentive alignment — When the load pays well, both the carrier and driver earn more. Drivers on percentage pay are naturally motivated to accept premium loads, maximize utilization, and support the carrier's pricing strategy. This alignment is the single biggest advantage of percentage pay.
• Automatic market adjustment — When freight rates rise, driver pay rises automatically without any action from the carrier. When rates soften, driver costs decrease proportionally, protecting the carrier's margin. This built-in elasticity is extremely valuable in the volatile freight market.
• Attracts entrepreneurial drivers — Owner-operators and experienced drivers who are confident in their ability to earn often prefer percentage pay because it gives them upside potential. During strong freight markets, percentage drivers can significantly out-earn their per-mile counterparts.
• Fair compensation for short, high-value loads — That 200-mile load paying $1,200 generates $300 at 25% for a company driver or $900 at 75% for an owner-operator. The pay reflects the load's actual value, not just the miles, which makes short premium loads attractive rather than undesirable.

Disadvantages of percentage pay:

• Variable carrier costs — Driver pay fluctuates with every load, making it harder to predict costs, set budgets, and calculate margins in advance. This variability requires more careful financial planning.
• Income instability for drivers — During slow freight weeks or in soft rate environments, driver earnings can drop significantly. This inconsistency can cause financial stress for drivers and increase turnover among those who prefer stable income.
• Requires full rate transparency — Drivers need to see the linehaul rate on every load to verify their pay. Some carriers are uncomfortable sharing this information, and disputes can arise if drivers question the reported rate.
• Low-paying loads cause friction — When you need a driver to take a repositioning load at a below-average rate, their percentage pay on that load will also be below average. This can make it difficult to fill necessary but lower-paying freight without a guaranteed minimum.

Flat Rate: The Third Option

While the per mile vs percentage driver pay debate dominates industry discussions, flat rate pay deserves mention as a viable third option. Flat rate assigns a fixed dollar amount per load, per route, or per day, regardless of mileage or revenue.

Flat rate works best for local and regional dedicated operations where the route, distance, time, and freight are highly consistent. A driver running the same 90-mile round trip five days a week at $350 per trip has complete income predictability, and the carrier has complete cost predictability. There is no mileage lookup, no revenue calculation, and no ambiguity.

The limitation is that flat rate does not adapt well to variable operations. If you occasionally need the driver to run a different route, you need a mechanism to adjust pay for that deviation. Flat rate is a niche solution, but for the right operation it is the simplest and most efficient pay structure available.

When to Use Which Pay Structure

The right pay structure depends on your specific operation. Here are scenario-based recommendations:

Choose per-mile pay when:

• You run dedicated or consistent lanes with predictable mileage
• You want tight control over per-load driver costs for margin analysis
• Your drivers are company drivers who value income stability
• Your freight rates are relatively stable (contract freight, long-term customer relationships)
• You do not want to share load revenue details with drivers

Choose percentage pay when:

• You run varied freight across multiple lanes with different rate levels
• You work the spot market regularly and rates fluctuate significantly
• Your drivers are owner-operators or lease-purchase operators
• You want drivers to be invested in maximizing load revenue
• You are comfortable with full transparency about linehaul rates

Choose flat rate when:

• You operate dedicated local or regional routes with consistent characteristics
• Route distance, time, and freight type rarely change
• You want the simplest possible settlement calculation

Recommendations by Fleet Size

Fleet size often influences which pay structure is most practical:

1 to 5 trucks (startup and micro-fleets): At this size, simplicity matters most. Per-mile pay is usually the best starting point because it is easy to calculate even manually and keeps cost tracking straightforward. If all drivers are owner-operators, percentage pay with a standard rate (e.g., 75% to all) is equally simple. Avoid complex hybrid models until your operation stabilizes.

6 to 20 trucks (growing fleets): This is where flexibility becomes important. You may have a mix of company drivers and owner-operators, dedicated lanes and spot freight, local and OTR. Consider using per-mile for company drivers on consistent lanes and percentage for owner-operators or drivers handling variable freight. A TMS like FleetLegend becomes essential at this stage to manage multiple pay structures without errors.

20 to 50 trucks (established fleets): At this scale, you likely have specialized divisions (dedicated, OTR, regional) with different operational characteristics. Use the pay structure that matches each division: per-mile for dedicated, percentage for OTR spot freight, flat rate for local. The ability to assign different pay plans to individual drivers within a single system is critical. Manual spreadsheet management at this scale is a recipe for errors and disputes.

Hybrid Approaches

Many successful carriers combine elements of multiple pay structures to get the best of both worlds. Common hybrid models include:

• Per-mile base plus percentage bonus: The driver earns a base per-mile rate on all loads, plus a percentage bonus on loads above a revenue threshold. For example, $0.50/mile base, plus 10% of linehaul revenue on loads paying over $2.50/mile. This provides income stability while incentivizing premium freight.
• Percentage with a minimum guarantee: The driver earns their percentage of revenue, but with a guaranteed minimum per-mile floor. If 28% of the linehaul rate works out to less than $0.45/mile, the driver receives $0.45/mile instead. This protects drivers on low-paying loads while preserving the percentage upside on better freight.
• Different structures by load type: Per-mile for dedicated contract freight and percentage for spot market loads. This matches the pay model to the freight characteristics: predictability where it exists and market alignment where it doesn't.
• Tiered percentage: The driver's percentage increases as they generate more revenue. For example, 27% on the first $8,000 of weekly revenue and 30% on revenue above $8,000. This creates a performance incentive within the percentage model.

Hybrid models are powerful but add settlement complexity. Without automation, calculating hybrid settlements manually is time-consuming and error-prone. Make sure your TMS can handle the specific hybrid rules you want to implement before rolling them out.

How FleetLegend Supports All Pay Structures

Regardless of which pay structure you choose, FleetLegend handles the calculations automatically. Here is how it supports each model:

• Per-mile: FleetLegend pulls dispatched miles from completed loads and applies each driver's stored per-mile rate. It supports separate rates for loaded and empty miles, and rate adjustments take effect immediately for all future loads.
• Percentage: The system calculates the driver's share of linehaul revenue for each load. You can set different percentage rates per driver and per load type. Fuel surcharge pass-through rules are configurable.
• Flat rate: Fixed amounts per load or per route are applied automatically based on the load assignment.
• Hybrid: FleetLegend supports custom pay plan configurations that combine per-mile, percentage, and flat rate elements within a single driver's pay structure.
• Multi-structure fleets: Assign different pay plans to different drivers within the same fleet. Company drivers, owner-operators, and lease-purchase operators can all coexist with their unique pay structures, and settlements are calculated correctly for each.

Deductions (fuel cards, advances, insurance, escrow, equipment leases) are handled identically regardless of pay structure. FleetLegend imports fuel card transactions, tracks advance balances, and applies recurring deductions automatically. Completed settlements sync to QuickBooks for seamless accounting. Explore FleetLegend's settlement features.

Frequently Asked Questions

Which pay structure do most trucking companies use?

Per-mile pay is the most common structure for company drivers, while percentage pay is the most common for owner-operators. Many mid-size fleets use both structures simultaneously, assigning per-mile to company drivers and percentage to owner-operators. The specific ratio depends on the fleet's composition and freight mix.

Can I switch a driver from per-mile to percentage pay (or vice versa)?

Yes, but the change must be agreed upon in writing by both parties before it takes effect. Provide the driver with a written notice explaining the new structure, the effective date, and how their pay will be calculated going forward. Apply the old structure to all loads dispatched before the change date and the new structure to loads after. Never change the pay structure retroactively.

Which structure is better for driver retention?

Neither structure inherently produces better retention. What matters most is that the pay is competitive, the calculation is transparent, settlements are accurate, and pay is delivered on time. A driver on per-mile pay who receives a clear, error-free settlement every Friday will be more satisfied than a driver on percentage pay who constantly questions whether the reported linehaul rate is accurate. Focus on execution rather than structure.

How does percentage pay work with fuel surcharges?

This varies by carrier. Some carriers include fuel surcharge revenue in the total revenue that the percentage is calculated on. Others separate it: the driver gets their percentage of the linehaul rate only, and fuel surcharge is either retained by the carrier or passed through to the driver at a different rate (often 100% for owner-operators who pay for their own fuel). Whatever your policy, define it clearly in the driver agreement and display it as a separate line item on settlements.

Conclusion

The per-mile versus percentage pay debate has no universal winner. Per-mile works best when you want predictable costs and run consistent lanes. Percentage works best when you want aligned incentives and market-responsive compensation. Many successful carriers use both structures simultaneously, matching pay models to driver types and freight characteristics. The most important factor is not which structure you choose, but how well you execute it: clear documentation, accurate calculations, on-time payments, and complete transparency build trust regardless of pay model. FleetLegend supports all pay structures and calculates settlements automatically.