Calculate a depreciation rate, initial value, implied resale value, implied total distance, or depreciation for a distance. Select the quantity to solve for and enter the required values.

Allocate the initial value minus expected resale value over a distance.

Constant-rate allocation estimate. Vehicle age, market changes and tax depreciation rules are not modeled.

Related Calculators

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 used for the depreciation allocation

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:

This calculator allocates the difference between initial value and expected resale value evenly over a supplied distance. It estimates a constant depreciation rate; it does not predict market value changes with each mile or determine tax depreciation.

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?

At a fixed assumed rate, a longer trip allocates more depreciation. In the rate formula, a longer total allocation distance reduces the rate when initial and resale values stay fixed. Actual market depreciation also depends on age, condition and market demand.