In a junk collection business, how to price your junk removal service right can mean all the difference between success and failure. Pricing too high can leave your potential customers looking to give their business to a competitor, and inversely, overly aggressive pricing can find you spending too much time taking on unprofitable or money-losing engagements.
When comparing pricing, look at providers that have been in business for years and have a proven track record of success.
There are often new entrants who offer their services at low rates that are unsustainable to business viability, and you do not want to follow that path. That’s why it is so important to understand your costs in relation to pricing.
Factors to Consider
Vehicle operating cost and overhead. Your charge should capture not only the operational cost of running your truck but also a portion of payments, insurance, and maintenance. Consider the distance and time involved in going to and from a job. Obviously, if you have to travel further, or anticipate sitting in traffic for extended periods, reflect that in your pricing. Will there be multiple stops at charities, recycling centers, and the landfill to unload the customer’s junk or more than one trip required? Additionally, you should not only factor in your hourly rate but a reasonable percentage for non-billable hours related to record keeping, marketing, and administration.
One person job or two? Some jobs may be appropriate for a single person while others will require a two (or more) person crew for lifting appliances or other heavy items. For extremely heavy items such as old pianos, it may make sense to develop particular expertise before attempting to handle these items.
Piano moving in itself is a specialized niche that you may be interested in exploring.
How long will loading take? Depending upon the nature of the junk to be removed, it may be as simple as loading an old sofa at the curb, or as tedious as picking up litter at a housing project cleanup. Sweeping or hosing down a driveway will add extra time. A quick check of quoted prices ranges from $20 to $30 per hour for excessive time spent picking up the load. Ask the right questions before taking on a job to limit the surprises. If possible, provide a price range rather than a hard quote to allow for unanticipated costs.
Consider drop-off fees. You will soon become familiar with fees. For instance, your area may have recycling centers that take such items as old paint for a charge, or other goods such as old computers, mattresses, and box springs or stuffed chesterfields and chairs. Again, be sure to incorporate these additional fees and mileage in your pricing.
Restricted items. There may be some items that are restricted, and which you might not be able to dispose of legally.
Get to know if there are any restricted items in your market area that you will not be able to take, such as drywall, solvents, asbestos, old paint or other items.
Residual revenue from junk. Be aware that pricing on some items may be more competitive, especially if there is apparent value to the junk removal service provider. Items such as washers, dryers, stoves, refrigerators, dishwashers, hot water heaters, air conditioners, metal shelving, or scrap metal may provide an income opportunity. Aside from scrap, old appliances may be sold on Craigslist, or to appliance dealers. Providers or charities in some areas offer free appliance pickup. Again, do your due diligence and understand how to get the best value for appliances or scrap metal, and to understand what the competition offers in this regard.
Due to the competitive nature of the business, in many respects, you might expect to be a “price taker” rather than a “price maker.” Having said that, you do not want to take on business that is unprofitable. If you find that you will have to charge above the going rate to generate a profit, take a close look at your operating model versus the competition. Can you change your approach to reducing costs, for example? Once again, be reminded that due to ease of entry into the junk business, there will often be new entrants who offer pricing that is unsustainable for long-term business viability, and that it will make no sense for you to match them.