Everyone likes to be in on a secret, right?
Think of how many stories revolve around hidden knowledge: Jason Bourne has to figure out who he is, Indiana Jones unravels the mystery around the arc of the covenant, and Pandora can’t stand not knowing what is in that secret locked box.
Sometimes, there’s a really good reason that knowledge is hidden. We’d all be happier of Pandora hadn’t opened her box, right?
But other times, what you don’t know can really hurt you.
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We’ve found this to be the case over and over again when it comes to waste hauler contracts. So many people are overspending on their waste haulers - some by as much as 50%!
In our experience, most haulers aren’t exactly forthcoming about what they charge you and how they set up contracts.
We’re drawing back the curtain and giving you an insider’s look at what’s really going on with your hauler contract.
You have more power than you know when it comes to setting up contracts - you just don’t know it!
Today, we’ll go over the top four questions we get about hauler contracts: whether you should sign one, lock in prices, and renegotiate.
Should I sign a waste hauler contract? What are the advantages/disadvantages of contracts?
OK, I admit, this is sort of a trick question. Gone are the days that your local hauler will pick up your trash without a signed service agreement. To get your waste picked up, you have to sign an agreement or contract with a hauler.
So, yes, you’ll definitely need to sign one, but you need to be absolutely certain that the one you create is in your best interest.
Contracts themselves aren’t the problem - bad contracts are!
Unfortunately, we see a ton of awful contracts.
Most of our clients sign contracts that aren’t in their favor!
Some sign with a hauler that charges way too much for their services. Others need an 8 yard dumpster instead of a 4 yard one, or two pick-ups a week instead of three.
They just don’t know that better options can be had. And contracts lock you in to overpaying for years at a time.
As I often joke with our clients, if you’d like to get out of your current agreement before the expiration date all you have to do is jump backwards through a ring of fire, stick the landing, and hope that your renewal notice letter gets to them within their allotted window of time!
But good contracts have their advantages.
In some instances, I will actually recommend that our clients sign an agreement with their hauler for longer than 3 years.
Why? Better long-term pricing. We are often able to negotiate terms that pre-determine when and by how much the hauler can raise their rates.
If there is typically a lot of volatility in a particular market or if there are not many options available, locking in the price can help the client accurately budget for years to come. It will also prevent the hauler from applying their typical price increases that most companies have just come to accept.
What is going to happen to waste disposal prices in 6, 12, 24, 36 months? Can I lock in a price?
I tell our clients all the time - it’s not a matter of when and if you will receive unauthorized price increases, it’s a matter of when, how much and how egregious the price increase will be.
The simple fact is, if your hauler contract isn’t thorough, you will be on the receiving end of some really fun surprise price hikes in the next few months and years.
You can lock in your price, but it must be done as part of your initial negotiation with your hauler.
If not done (or not done properly) I find that most haulers will increase prices every year by as much as 15% or more. And there usually aren’t any warnings ahead of time, either.
In order to catch these price hikes or other errors, the hauler invoices need to be reviewed carefully each month and compared to previous invoices.
When a discrepancy is found, a company representative will need to let the hauler know that you are not going to pay the invoice until you understand the price increase and why you received it.
Sounds like a lot of work, doesn’t it? We know! That’s why support options are built into our service agreements with our clients.
We find it’s worth it: we find mistakes on about 10% of hauler invoices. And no, that is not a typo!
We take on all the work - we notify the hauler on our client’s behalf and request a credit and/or explanation of the price increase.
As a result, you and your staff spend their time doing their jobs instead of trying to track down and negotiate with a hauler.
When we identify a price increase it’s almost never authorized. Why? We build it into hauler contracts.
So when these price spikes do hit, we have already negotiated terms on our client’s behalf that prevent or minimize future price increases.
We tend to have a lot more success negotiating price increases than most businesses who go it on their own. Why?
We know the contracts and what they should be paying.
We know who to call.
We continue to call until it gets resolved.
You’re a busy person! You don’t always have the time or resources to get to the bottom of price increases, so it’s something we’re glad to take on on your behalf.
What waste hauler terms are negotiable?
You can actually negotiate your hauler terms! So many people don’t know this, and it ends up really coming back to bite them.
Honestly, your hauler would probably prefer that you stay in the dark about what you can negotiate and what you can’t. But we don’t! Take a look at the list below.
Negotiable terms include:
Pricing: How much you pay for services like pick-ups, dumpster rentals, etc.
Length of the contracts: Contracts can vary in length, but you do have some control over how long the terms are.
Price increases: Contracts stipulate when and by how much a waste hauler can hike prices.
Ancillary fees: Some examples are fuel/environment fees, recycling recovery fees, overage fees and administrative fees
Payment terms: How and when you will pay the hauler.
Performance: Specifies hauler pick-up schedule, how quickly they’ll show up after a service request, and protocol for missed pick-ups.
Pick up timing: This part of an agreement discusses roll-offs and compactors, how quickly they will pick up after a client requests one.
Should I renegotiate now or at some later date?
The timing of renegotiating your current contract is critical. Wait too long, and you could be locked into overspending for months.
In general, the sooner you can renegotiate more favorable rates, the better.
A few ways you can do this:
See if you can get other bids from area haulers. There are often other haulers in your area who can service your location for less.
Include price hike stipulations in your contract
Make sure the level of your current service is what you actually need (pick-up frequency, equipment limitations, etc).
Ending a contract with a current hauler can be pricey, so we make sure that it actually benefits you.
We do a cost benefit analysis to see if curtailing your contract with one company could save you money in the long run.
And you know what? 99% of the time, it does.
Consider a manufacturing company we recently worked with.
They were paying one hauler over $1600 a month for their services at one of their locations in Florida.
Surprising absolutely no one, we found they were overpaying. There was another hauler in their region that could do provide the same services but for $300 less a month. Which means that they were overspending by $3600 a year!
How did we do this? We have standard addendum that we use that tilts the deck in our clients favor. And it works - more than 95% of the time, we find overlooked savings.
Not sure if your current hauler contracts are really in your best interest? Are you currently trying to negotiate with a hauler and just finding it completely overwhelming?
Download our free Waste Hauler Questionnaire. It has all the questions you need to ask your hauler about pricing, contracts, and waste audits.
Let us know your questions in the comments below.