Fleet Management Costs (2024): Everything You Need to Know

Any commercial US fleet has costs that can’t be reduced, from vehicle leases to insurance and taxes. To save money, fleet managers must focus on the variable costs instead. Fuel expenditure is the largest, although maintenance, safety, and route optimization are also important.

Keeping costs low starts with understanding the full value of all the elements that your fleet pays for: The right fleet management software solution can help you centralize all these cost factors and keep an eye on them during your daily operations. Small tweaks can add up to big savings.

Here, we’ll break down the full cost of managing a fleet, with a focus on the ways these costs can be best tracked and reduced to ensure a healthy future for your business.

In this guide:

• Fleet Management Costs Breakdown
• Fleet Management Software Costs
• How Fleet Management Software Can Save You Money
• Fleet Management Best Practice
• About Our Research
• Start Lowering Your Operating Costs Today

Fleet Management Costs Breakdown

Understanding different fleet management costs helps when working out any given fleet’s TCO, which is short for “total cost of ownership.” This term refers to the actual cost of an asset and includes all associated costs like maintenance and depreciation, as well as the initial acquisition cost.

Calculating your fleet’s TCO can be extremely valuable, as it varies dramatically from business to business and even vehicle to vehicle. If you can find ways to better optimize the cost of your fleet, you can substantially impact your bottom line.

Before we delve deeper into the different expenses that impact fleet management costs – and subsequently a fleet’s TCO – it’s important to know the difference between fixed vs operating costs.

Fixed vs operating costs

When it comes to the total cost of owning a particular asset, fleet expenses come in two forms: fixed and operating. Fixed costs describe charges that are consistent regardless of how the asset operates, which includes everything from taxes and insurance to licenses and lease payments. These kinds of costs are often hard to reduce.

On the other hand, operating costs are more variable and can change depending on the usage of the asset. Major operating costs for fleets include tolls, detailing, repairs, parking, and telematics systems.

When trying to reduce your overall fleet budget, we’d suggest focusing on lowering your operating costs.

What influences fleet management costs?

When calculating your own fleet’s costs, consider these common categories:

Vehicle ownership

Has every vehicle in your fleet been fully paid off, or do you pay a per-month lease instead? Whatever the case, you should know the total value of each vehicle. Your calculation should include depreciation, as the value of your vehicle will steadily drop due to wear and tear.

Driver wages

How many drivers does your fleet need and how much are they paid? You should factor in the average overtime wages you expect to pay over a given period.

Fuel costs

Fuel is the biggest operating cost for most US fleets, so you should carefully track how much you spend on fuel per vehicle. For electric vehicles, you should include charging costs.

Fuel taxes are another element to consider: Thanks to IFTA regulations, your fleet’s tax liability can be easily calculated each quarter, as long as you track the miles driven and gallons of fuel used across each US state or Canadian province.

Vehicle maintenance costs

All your vehicles will need regular maintenance to perform at their best. This includes both the cost of materials (such as motor oil, radiator coolant, brake and power steering fluid, windshield wipers, and brake pads) as well as the workforce required to change them.

Tickets, fines, and toll charges

Go back over your total funds lost to federal, state, or local fines across past years or quarters. This might include speeding or traffic tickets as well as fines for failure to comply with regulations like the ELD mandate.

Toll charges are another cost of operating a fleet. Since they will vary from day to day and month to month, you should determine a typical average cost, so that your budget accounts for toll charges moving forward.

Insurance premiums

Fleets in the US should have several insurance plans covering different categories of risks. Your operation will probably need automobile liability and automobile physical damage insurance. Your prior claim history will impact how much you pay.

Fleet management software

Your management costs should include the monthly subscription to the software that you use for the process of management itself. This may include the hardware devices that record data for the software as well: We’ll explain in more detail in the next section.

Fleet Management Software Costs

Fleet management software pricing typically ranges from $15 to $50 per vehicle per month, depending on the features and size of your fleet.

For a small fleet of 10 vehicles with basic features, you can expect to pay around $15 per vehicle per month or $180 per year. A larger fleet of 50 vehicles with more advanced features, such as real-time tracking and reporting, could cost upwards of $50 per vehicle per month, or $2,500 per year.

This table shows typical cost ranges per each vehicle in a fleet of trucks:

Fleet management systems can be used to dispatch drivers, provide route planning and traffic information, monitor fuel, and much more. If your business uses a fleet of vehicles, it’s well worth investing in this kind of service — especially given US federal regulations like the ELD Mandate require some form of fleet tracking.

Why pay for fleet management?

A fleet management system is a bundled combination of hardware and software that tracks data from every vehicle in the fleet in real time. Different systems record different data: Those with sensors installed into a vehicle’s engine will receive more comprehensive data about the engine status than plug-and-go dashboard devices.

Some operations do only or mostly “less than truckload” (LTL) shipping, meaning that a single truck is delivering goods to multiple clients. These fleets should look for LTL-friendly fleet management software, which includes a specialized load optimization service not offered by TL-oriented fleet management software.

Fleets of five vehicles can benefit from a management system as much as those with thousands of vehicles. Any one of these systems should streamline all fleet management tasks, boosting your bottom line and saving you money.

Verizon Connect Reveal is one of the top fleet management providers around – here’s a quick case study demonstrating how this system can work.

What influences fleet management software costs?

The total price given for a fleet management system likely covers four different costs: The owned or leased hardware devices installed in each vehicle; the monthly or annual software licensing fee; the one-time cost of hardware installation; and online or in-person training.

Many fleet management services will bundle all these costs, giving fleets a simple one-time onboarding cost followed by a monthly subscription fee, typically billed annually.

However, other factors will impact how much your company pays. Here are the biggest cost factors to know, in order of importance:

• Size of your fleet — almost all FMS companies charge per vehicle (or user) per month, so a larger fleet will pay more than a smaller fleet.
• Features required — different systems track different types of data, from ELD compliance to fuel tracking to alerts on when best to rotate your tires, and on average, more extensive features will cost more.
• Vendor — no FMS company is the same, and vendors’ prices can fluctuate.
• Type of shipping service — Less-than-truckload (LTL) shipping operations should check to ensure an FMS tracks multiple destinations along a single route.
• Additional hardware needed — Some further costs may be necessary, yet not included in FMS pricing. For example, drivers might need company tablets or smartphones to access their data on the move, and use the FMS to pass roadside inspections. This would not be included in the FMS package.

How Fleet Management Software Can Save You Money

Initial costs for a fleet management system may seem high but one of the main reasons fleet managers love these tools is for the cost savings they get in return. How?

The most clear benefit lies in fuel savings. Fleet management software tracks how long vehicles are left idling and how fast those idling vehicles burn through fuel. Paired with the improvements it offers in routing, a fleet tracking system can save the average operation between 13% and 20% on fuel, reports show. Plus, considering the cost of fueling vehicles is the number one operational risk for fleet management organizations, these kinds of features can make a big difference.

The cost of fueling vehicles is the number one operational risk to fleet management organizations. Source: Tech.co

Sudden stops are also tracked by many systems, allowing fleet managers to note which drivers are braking harshly and how often. Cutting down on these incidents keeps a fleet’s brake pads in good condition longer, saving on repair costs.

Since management systems track each driver’s overtime hours, fleet managers will be able to help drivers avoid overtime when it happens — and not learn about it when balancing the checkbook weeks later. Plus, GPS-powered fleet management systems speed up service overall: They save transportation operations approximately 54 minutes per day, according to one Motorola study, for a savings of $5,484 per employee.

Finally, these systems give fleets a centralized database that allows for easier analysis and optimization insights. According to research from Aberdeen Group, fleet operations with an FMS are more than twice as likely to have a centralized repository for data collected on the road, to integrate that data into their back office, and to have data scientists dedicated to analyzing it.

 Other reasons to use a fleet management system

There are plenty of benefits to using a fleet management system. Here are some of the ways your business can save time and money with one.

Reducing operating costs is the number one priority for fleet management organizations. Source: Tech.co

• Comply with regulations: It’s the law. The ELD Mandate made it essential for businesses to track their drivers’ working hours using some sort of electronic logging device.
• Better safety: Fast response times can make a difference, and any GPS fleet tracking system can alert a fleet manager within minutes from anywhere on the globe. According to the Federal Motor Carrier Safety Administration itself, ELDs are estimated to save 26 lives per year.
• Fewer emissions: By tracking and reducing fuel costs, your operation will burn less CO2 to get where it’s going. By one operation’s estimate, saving $250 in annual fuel costs per vehicle will cut carbon emissions by 2,500 pounds per vehicle each year.
• Less travel time: One Nustats study found that drivers with traffic-sensitive navigation systems can cut 18% of the time on the road on any given trip. For the average driver, that’s a full four days out of the year.
• Save money: In one survey we ran here at Tech.co, we found reducing operating costs was the number one priority for fleet management organizations, with increasing efficiency and improving drive productivity rounding out the top three. Fleet management can streamline your business in a way that makes you more money while saving you costs in the meantime. Ironically, however, budget constraints are the biggest barrier to the use of new technology.

Budget constraints are the number one barrier to the use of new technology in fleet management. Source: Tech.co

A good fleet management system will help managers with every aspect of operating a fleet, including route planning, live diagnostics, fuel tracking, maintenance tracking, financing, and driver health and safety.

A fleet management software might also offer two benefits that don’t immediately lead to savings but can prevent potential catastrophes down the (metaphorical) road. Tracking vehicle locations is a natural anti-theft precaution, and the right system can give managers vehicular controls, allowing them to remotely limit speeds or slow vehicles to prevent mistakes or collisions.

Fleet Management Software Provider Pricing

Let’s take a quick look at how typical fleet management costs stack up across some of the biggest providers in the industry:

You’ll notice immediately from the table above that there are some big differences, from $5 per vehicle, per month to over $40. Scaled up across a year for a small to medium fleet, and this difference can quickly become thousands of dollars.

Fleet Management Best Practice

As with any management software, fleet management software opens fleet managers up to a few vulnerabilities if not used responsibly. Here are the downsides to fleet management systems that you should be aware of.

Don’t Intrude on Privacy

Fleet management software platforms aren’t typically designed with vehicle drivers’ privacy in mind. It records their speeding habits, their location, and how quickly they take a 90-degree turn, after all. This is perfectly legal during working hours, though employees should be made aware of what’s being tracked and why. However, if a fleet operator’s vehicles are ever used privately by employees, the operator should take care to disable the fleet management software for these trips.

Manage Driver Expectations

Speaking of privacy, drivers in a fleet may be upset at switching to fleet management software and away from a passive GPS tracker or a paper logging system. Having their driving habits and overtime tracked may make them uncomfortable. The best approach to introducing a fleet management system is transparency and open communication. Depending on the fleet management software provider, driver training courses may be provided to ease them into the new process.

Some businesses also choose to alleviate any negative feelings employees might have around tracking by providing rewards based on the new data. For example by offering bonuses to the most fuel-efficient drivers or those with the lowest records of harsh braking. These awards can be allocated easily using the driver scorecard reports offered by many fleet management systems.

About Our Research

At Tech.co, our testing and research team has examined 29 fleet management systems, measuring each across 51 areas of investigation. Our research can be broken down into six main categories.

First, we check price factors, including the cost of each plan, free trials, and the length of required contracts, as well as support factors, which include phone, email, and total support hours, among other elements.

We also look at features across several categories: Tracking, which includes GPS tracking, route optimization, and geofencing; driver management, which looks at behavior monitoring, performance reports, driver ID, and more; and vehicle management, which covers direct maintenance and management needs. Finally, our product features category covers nice-to-have features beyond the basics, including asset tracking, panic buttons, IFTA tracking, and other functions.

Finally, we calculate a final score for each system, with the most important features weighted more heavily. Our in-house researchers will regularly re-test all metrics to ensure our findings stay updated.