Depreciation Cost Per Mile Calculator

Reviewed By: Scott Hickam (MBA, Finance)

Enter the initial value, salvage value, and total mileage into the calculator to determine the depreciation cost per mile.

Depreciation Cost Per Mile Calculator

Enter your car’s numbers — get the depreciation cost for every mile you drive.

I know the miles

Estimate by years owned

Purchase Price ($)

Resale / Current Value ($)

Total Miles Driven

Purchase Price ($)

Years You’ll Keep It

Miles Per Year

Depreciation per mile

$0.000

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Depreciation Cost Per Mile Formula

The following equation is used to calculate the Depreciation Cost Per Mile.

DCPM = (IV - SV) / M

Where DCPM is the depreciation cost per mile ($/mile)
IV is the vehicle’s initial value ($)
SV is the salvage or resale value ($)
M is the total miles driven

To calculate depreciation cost per mile, subtract the salvage value from the initial value, then divide the result by the total miles driven.

What is a Depreciation Cost Per Mile?

Definition:

Depreciation cost per mile is a measure of how much a vehicle’s value declines for every mile driven. It accounts for the initial purchase price, expected mileage, and salvage or resale value over the life of the vehicle.

How to Calculate Depreciation Cost Per Mile?

Example Problem:

The following example outlines the steps and information needed to calculate the Depreciation Cost Per Mile.

First, determine the initial value. In this example, the vehicle was purchased for $40,000.

Next, determine the salvage value. This vehicle is expected to have a salvage or resale value of $5,000 at the end of its life.

Also, determine the total expected mileage. In this example, it is estimated to be 120,000 miles.

Finally, calculate the depreciation cost per mile using the formula above:

DCPM = (IV - SV) / M

DCPM = ($40,000 - $5,000) / 120,000

DCPM = $35,000 / 120,000

DCPM = $0.292 per mile

FAQ

Is depreciation cost per mile the only expense to consider when operating a vehicle?

No, depreciation per mile is just one component of overall vehicle expenses. Maintenance, fuel, insurance, and registration fees should also be factored in when calculating the true cost of ownership.

How can I reduce depreciation cost per mile?

To reduce depreciation cost per mile, purchase a vehicle with a higher resale value, maintain it properly to preserve condition, and avoid unnecessary mileage. Cars that hold their value well or are in high demand typically depreciate more slowly.

Does higher mileage always mean higher depreciation cost per mile?

Generally, more miles lead to greater overall depreciation. However, the average depreciation cost per mile depends on both the initial purchase price and salvage value, so the relationship can vary from one vehicle to another.

Follow-Up Calculations

If your vehicle loses $12,000 over 60,000 miles, the depreciation works out to $0.20 per mile, but that’s only one part of ownership. You can plug that figure into the total cost per mile calculation to add fuel, maintenance, insurance, and tires for a fuller operating cost.

A depreciation figure of $0.20 per mile is about $0.12 per kilometer, since one mile equals 1.609 kilometers. Use the per-kilometer ownership cost view if you track expenses in metric units or compare your car to international fleet data.

If you expect to drive 15,000 miles a year for 4 years, that same $12,000 in depreciation is spread across 60,000 miles, which is why ownership length matters so much. The lease term and mileage together determine how quickly depreciation hits each mile, and shorter holding periods usually raise the per-mile cost.