paypermile

Pay-per-mile is a pricing or compensation model in which charges or wages depend on the number of miles traveled. It is used in auto insurance, freight transport, and some fleet-management services, and commonly relies on telematics or odometer readings to track mileage.

In auto insurance, pay-per-mile schemes are often called usage-based or pay-as-you-drive. Customers may pay a base premium plus a per-mile rate, or receive a monthly mileage allowance. Telematics devices or mobile apps monitor mileage and sometimes driving behavior, enabling insurers to adjust costs based on actual use. The model can reward low-mileage or careful driving, but high-mileage drivers may incur substantially higher costs. Privacy and data-security concerns are frequently cited.

In logistics and trucking, mileage-based pricing pays carriers according to distance hauled, with rates that may reflect fuel costs, terrain, load, and route factors. The approach is intended to align compensation with usage and can influence routing and efficiency. In some ride-hailing or delivery contexts, distance-based pay is used to calculate earnings or rates for trips, sometimes alongside time-based components.

Challenges and criticisms include the accuracy of mileage reporting, potential for device tampering or data privacy issues, and regulatory considerations. The model shifts cost risk toward drivers or carriers and can complicate budgeting for individuals who drive irregularly. Proponents argue it better aligns charges with actual usage and can promote efficiency.

Notable examples include Metromile, a pay-per-mile auto insurer, and Progressive’s Milewise, as well as various freight and fleet-management services that monetize mileage.