You know what most haulers thrive off of? How they really make their money?
Your ignorance about what they do.
Yup, seriously.
But you know what? You have every right right to know how you’re being charged for your waste services.
Honestly, haulers aren’t going to like this article because we’re going to be really honest with you about how they decide what to charge you.
But we really believe that knowing things like how haulers calculate their operational costs is vital for you as a decision maker.
Knowledge is power; and one of our goals here at WCI is to empower you. You don’t have to overspend on your waste expenses - you just have to know what to look for!
Psst! Download our free Guide to Reducing Waste Expenses here!
The more you know the nitty-gritty about waste hauler costs, the less likely you are to sign less than ideal hauler contracts.
So let’s jump in! We’ll look at the top three questions we get about hauler costs
What are the primary components of “costs”?
Can the vendor’s “costs” (not Price) be reduced?
What is the vendor’s profit margin?
Ready? Let’s go behind the scenes of hauler pricing!
What are the primary components of waste hauler “costs”?
Of course, waste hauler have costs on their end. It costs them to do what they do.
Some of these costs include:
Disposal cost to drop off waste materials at disposal facility.
Did you know that disposal facilities (like dumps) charge for the waste they receive? Haulers have to pay this fee, and this fee often gets passed onto the customer, or their client.
Cost of hauler equipment.
Dumpsters, garbage trucks, and composters are expensive! Many people rent the equipment from the hauler company, so the haulers are responsible for maintenance. The hauler companies have to buy and service most equipment they use for waste disposal.
Cost for servicing account.
A few other operation costs factor into the actual cost the hauler incurs to conduct business.
Consider what it takes to make an average waste disposal run with a dump truck. Haulers have to take into account employee compensation (for driving the truck), the fuel cost, and the cost of the truck itself (wear and tear).
Haulers will typically divide up the number of locations they have to service with one truck to figure out how much to charge each customer.
Some of these costs are passed onto the consumer, but the degree to which it is passed on varies from hauler to hauler.
Can the waste vendor’s “costs” be reduced?
A lot of the factors in pricing listed above are simply out of the hauler’s power. No one can control gas prices or how many oil changes a truck will need. There will always be a certain amount of operational expense, and nowhere is this more true than the waste industry.
But the hauler absolutely controls how much of his operational fees he passes on to you. And honestly, too many of them will pass on a ridiculous amount of his fees.
This is why it’s so critically important to set up your contracts right the first time! A good contract will prevent the hauler from overcharging you for his services.
In order to reduce the amount of operational costs the hauler passes on to you, you need to:
Review your contract to see if there is a fee to break your contract.
Price out other vendors to see if you can get less expensive service.
Audit your expenses to see if your waste needs are actually being met by your current level of service.
If it makes financial sense to switch waste haulers, you absolutely should do so!
What is the vendor’s profit margin?
No one works for free, right?
Most companies attempt to pass on any additional costs they incur back to their clients in the form of price increases. The waste hauling industry is no different.
The profit margin varies from hauler to hauler and from region to region. However, most haulers will not enter an agreement unless they are making at least a 15% profit. (We’ve actually seen some companies make as much as 100% or more in profit!)
Profit margins for the haulers almost always increase every year. We’re talking 99% of the time.
Haulers tend to increase their rates 1-10% of the time. We’ve seen them do this up to four times a year!
But you know what else?
A vendors profit margin is also dependent on you, the client!
When these price spikes happen, the majority of businesses either don’t notice them or don’t question them. Haulers often bet that you won’t notice, or that you won’t care if you do.
But we do. We conduct monthly invoice audits to catch these hikes, then fight them on your behalf. Not one of our clients will ever pay an unfair bill or invoice!
So there you have it! You are not powerless when it comes to negotiating your hauler contract, you just have to know the rules of the game.
Now, you know what to be mindful of when discussing pricing and contractual agreements with a waste hauler.
For even more information, download our free Waste Hauler Questionnaire. It has all the questions you need to ask your hauler about pricing, contracts, and waste audits.
Think you might be overspending on waste disposal? What questions do you have? Let us know in the comments below, or reach out to us!