← Freight broker load margin calculator
Gross margin is the number every load board and TMS shows, and it leaves out the costs that decide whether a broker makes money: the days you fund the carrier before the shipper pays, the factoring fee, the claims reserve, and your overhead. This is a way to price from the net margin you want, backwards.
Revenue is the line haul plus whatever you bill for detention, lumper or layover. Carrier cost is the carrier rate plus the same extras you pay out. The difference is gross profit.
If you pay the carrier in 3 days and the shipper pays in 45, you lend the carrier cost for 42 days at your cost of capital. On a $2,000 carrier cost at 10% that is about $23.
Factoring and claims or bad-debt reserve come off revenue. A rep commission usually comes off gross profit. Each is small, and together they take a thin margin to zero.
Divide your monthly TMS, insurance and admin cost by loads moved to get a per-load figure.
Because net profit moves in a straight line with the shipper rate, the rate that gives your target net margin can be solved exactly. The calculator gives that quote, and the highest carrier rate you can pay if the shipper rate is already fixed.
Net margin is (shipper rate plus billed extras, minus carrier rate and paid extras, minus the cost of fronting the carrier, factoring, reserve, commission and overhead) divided by revenue. Gross margin is the same thing before those costs.
Fix the shipper rate, then solve for the carrier cost that leaves your target net margin: revenue times (1 minus factoring, reserve, commission and target) minus overhead, divided by one plus the float cost minus commission. The calculator does this for every load.
You are lending the carrier cost for the extra days. At a 10% cost of capital, 30 extra days on a $2,000 carrier cost is about $16, which is a meaningful part of a $200 gross profit. Either price it in, shorten terms or factor the invoice and enter the fee.