Broker margin calculator

What a broker margin is

A freight broker connects a shipper that needs a truck with a carrier that has one. The shipper pays the broker a rate. The broker pays the carrier a lower rate. The difference is the broker's margin, sometimes called the spread. It pays for the broker's staff, systems, insurance, credit risk and profit. Margins are normal and brokers do real work. But a carrier who knows the margin on a load negotiates from a stronger position.

This broker margin calculator does the simple math once you know both rates. The hard part is usually knowing the shipper's rate at all, which is why the page also covers when and how a carrier can ask for it.

How the margin is calculated

The margin in dollars is the shipper's rate minus the carrier's rate. The margin as a percentage, sometimes called the freight broker percentage, is that dollar margin divided by the shipper's rate. The counter is the shipper's rate times one minus the share you'd accept the broker keeping. That share is your own assumption: we don't print a typical broker margin, because margins vary widely by load, lane, shipper and broker, and published averages are often unsourced.

• EXAMPLE

  EXAMPLE LOAD

  Shipper pays $2,500, carrier gets $2,000

  The broker keeps $500, which is 20% of the shipper's rate. If you'd accept the broker keeping 12%, your counter is $2,200, about $200 more than the current offer. Lead with a reason, like the empty miles or a tight appointment, rather than the broker's margin itself. These are EXAMPLE numbers.

Can a carrier see the shipper's rate?

Federal rules require brokers to keep a record of each brokered transaction. Under 49 CFR 371.3, that record includes the compensation the broker received, and each party to the transaction has the right to review it. In practice, many broker-carrier agreements include language asking the carrier to waive that right, and how far a waiver holds has been argued for years.

FMCSA has proposed changes to make these records easier to get, including electronic access and limits on waivers. Rules can change, so check the current text of 49 CFR 371.3 and any final rule on FMCSA's website before you rely on it, and read your broker-carrier agreement for waiver language before you sign it.

Other ways to estimate the shipper's side

• +Freight broker rate sheets. Some shippers share rate sheets or contract rates on lanes they tender often. If you haul direct for a shipper later, you'll see their side directly.
• +Rate history tools. Paid freight rate tools show broker-to-carrier rates and sometimes contract rates on a lane. Our guide on the freight rate history chart explains how to read them.
• +The load itself. Hard-to-cover loads, short lead times and holiday weeks usually mean the broker has more room to pay the carrier.

Reading your result

A higher margin isn't wrong in itself. A broker covering a hard load at short notice, or carrying a slow-paying shipper, may need it. What the number gives you is room to negotiate. If the margin is well above the share you'd accept, counter with a clear number and a reason. If it's already thin, push less and look for loads with more room.

The rate on the rate confirmation is what you'll be paid, whatever the margin. Read it before you sign, and check that the accessorials and terms you agreed on the phone are on it.

A dispatcher on your side of the table

A dispatcher works for the carrier, not the broker, and should never take money from the broker side. Our dispatchers counter every load above your floor, check every broker before calling, and bring you the result to approve. The broker sends the rate confirmation straight to you, and your freight money goes from the broker to you or your factoring company, never through us. See how we work with owner-operators.

To build your counter from your own costs instead, use the counter-offer calculator. For hotshot loads, the hotshot rate calculator includes a minimum charge for short runs.