How to price a junk removal job

There are various ways you can set your junk removal pricing. Especially when you’re first starting out, it can be tricky to figure out how much to charge for your services.

At the end of the day, your job is to haul junk and your goal is to make a profit. So you have to make sure this is baked into your pricing strategy.

But not every approach will leave customers with a price upfront. There could be some discounts applied and you might not have an exact estimate until you’re at the job site.

Here are some ways you can start pricing jobs accurately and for profit. Let’s get started.

Deciding how to price junk removal jobs

There are three ways you can price your junk removal jobs: volume, time, or weight. You can also use a combination of a few. Whatever you choose, it’s about selecting the methods that work best for your business.

Volume:

Volume-based pricing might be the most popular junk removal business pricing approach and the most standard method. It’s based on fractions of how full your truck is, ranging from a minimum truckload to a full truckload.

If you hit a full truckload on a job, the price would restart again by adding a “new” truckload.

More experienced team members can determine the price by roughly measuring the volume. This measurement can be pretty accurate. But newer, less experienced team members will misquote.

If you choose a volume-based pricing approach, you’ll have to accept the learning curve that comes with it and train your less experienced staff on how to quote using this strategy.

Volume-based pricing is often combined with a time-based pricing model. Your standard price includes one hour of work but if the job exceeds that hour, an additional cost is added.

Time:

A time-based pricing method is probably the easiest way of organizing your junk removal pricing. It’s based on the time it takes you and your crew to complete a job, which is fairly straightforward.

This method is dependent on you clocking in at the start of the job and clocking out at the end to get a solid idea of how long the job took. So, you or your crew must remember to keep a close eye on the clock.

Although this is a simple approach, it’s important to remember there are some downsides to a time-based pricing model.

The major downside is that your customer doesn’t get a straightforward estimate upfront. So, your invoice process comes after the job is done. You could also misprice a job if your calculations are off — you might underestimate how much time a job takes, or you might overestimate it.

This means you could either be losing a lot of money, or you could be charging your customer way too much money, costing your relationship and potential referral.

There are also many factors to consider with the time plus disposal fees method:

  • Where is the property and how is it laid out? If it’s an apartment building in the city, accessing the junk is going to take a lot more time compared to a job at a semi or detached house in the suburbs.
  • How much disassembly is required, if any? Old and damaged furniture, mattresses, or large appliances may need to be broken down for recycled parts.
  • How much does the junk weigh? Heavier items will take more time to haul and it might also mean you require more help from your crews (costing you more labor).

A time tracking software can help you perfect this pricing method, by giving you an accurate and clear picture of time spent at each job.

Weight:

Charging by weight could be a more clear-cut approach to pricing junk removal jobs because the weight of the junk you’re hauling is fixed.

You can charge per pound of junk, giving your customers a total cost in their invoice at the end of the job.

Again, this method doesn’t give your customers an upfront cost, but you can create a pricing chart which roughly shows how much a customer may pay for weight ranges.

Weight-based pricing is slightly more scientific since you can get an accurate measurement and price calculation. This means you’re relying less on guesswork and more on facts.

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Junk removal pricing best practices

Once you’ve found the right pricing model for your business model you can use these best practices to guide your pricing strategy.

Research your competition
This tip comes with a warning: don’t be too focused on this. When you’re first starting out, call your local competitors, and ask if they can give you a quote for the junk you want to haul. The big franchises often list their prices on their website and if they don’t, then give them a call as well.

Competitors can give you a benchmark of what your prices should be, but your business goals are unique. Don’t focus too much on what the other guy is doing. As we learned in the 2020 Home Services Trends report, home service providers don’t need to low ball value just to win a job. This ends up hurting your bottom line in the end.

Consider your margins
Growing profit margins is key to your junk removal business’ success. Understanding how profit margins impact your small business is equally important.

Figure out how profitable you are by calculating your net profit margins (that’s how much money you have from sales after subtracting all your expenses).

Net profit margins are an indicator of how much you’re making after you’ve paid all your expenses.

These expenses include operating costs like:

  • Office rent
  • Gas
  • Truck insurance
  • Salaries
  • Equipment or truck maintenance
  • Phone bills
  • Internet bills
  • Service business software
  • Accounting software
  • Taxes
  • Interest

You can also use your net profits to invest back into your business so you can continue to grow.

These investments can include:

  • New marketing and advertising initiatives
  • Software upgrades
  • Equipment upgrades
  • Expansion initiatives into new cities or territories

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Get scientific with your pricing
Regardless of which pricing method you’re using, keep track of how long a certain truckload takes to unload and how many employees you’ll need to help.

Store all of this in a business management software that provides time and job tracking features. You shouldn’t guesstimate on every job.

You’ll better understand your work, and how much it should cost as you actively track your time on a job.

Get all the job information you need upfront
Ideally, this happens in the booking or work request process on your website.

You can imitate a similar system on the phone and depending on your team setup, you can have an administrator put all of this information into a work request for you.

Information you can gather can include:

  • Client contact information
  • Junk pickup location
  • Requested service date and service time
  • Full or self-service (depending on your service offerings)
  • Type of junk they need hauled
  • Special instructions

You can also automate this process with junk removal business software to improve your day-to-day. Automation helps you complete basic redundant tasks, so you can focus on scaling your business instead.

Having all of this information upfront also gives you an idea of what your “profit” monsters will be, so you can yield the most high-profit jobs.

How to price your junk removal jobs, step-by-step

Depending on which pricing method you choose, these steps might differ. But here are the general steps you should take when calculating your job prices.

1. Understand the work

Get the full scope of your work by using job request forms on your website or Facebook page. You’ll automatically get a notification as soon as a new request comes through and you’ll have all the job information on hand immediately.

Ask your prospect all of the important questions there to better prepare you for the job ahead such as:

  • The job location
  • The type of building they live in or are located in
  • The amount of junk they would like to haul
  • If they would like to donate some of the junk
  • If they would like additional services (cleaning, property maintenance, handyman work, painting — this is a great opportunity for business partnerships)

2. Estimate your labor cost

Now that you have a full scope of what the job request entails, you can estimate the cost of your biggest expense: labor.

If you’re hauling a couple of items you may need one to two employees to help. If you’re hauling two truckloads of junk, you’ll likely need a few extra hands to get the job done within a reasonable amount of time.

If you don’t know how to start, this is when a junk removal service software like Jobber comes in handy to help you digitally record and save job notes on the go.

Here’s how you can calculate your junk removal labor cost:

  1. Multiply the number of hours needed to complete the job by the number of employees needed on the job to get your labor hours.
  2. Next, calculate your hourly labor cost. This includes employee or subcontractor wages, extra for taxes, worker’s compensation, and any other employee-related expenses. 20% is a reliable markup for an hourly labor cost.
  3. Multiply the labor hours by the labor cost to get your labor cost.

3. Add in taxes

We can’t forget taxes when pricing jobs. Remember to include payroll taxes in your labor costs.

4. Estimate your profit

Margin = net sales revenue – labor – material – overhead costs

A higher profit margin means your business is retaining more money.

If you’re unhappy with the profit percentage, try playing around with the numbers. Adjust your markup percentage or your profit margin percentage, and do the math again.

5. Write the quote, send it, and follow up with your customer

You can write a professional-looking quote using a downloadable and customizable quote template.

If you want to get paid faster and automate this process, you can try using quoting software for home service businesses.

Once your quote has been professionally filled out, it’s time to email or text it to your customer so they can easily and quickly review, view, and approve.

Emailed quotes allow your customers to open them in PDFs while texting quotes may get them opened and seen faster. Both options offer very professional-looking solutions in comparison to a pen and paper alternative.

Pro Tip: Jobber’s quoting software automates quoting. Create your quote in the app, and Jobber will automatically send your customer a link to view the quote. From there they can either approve it or request edits online.

Next, you’ll have to send a follow-up email to customers you haven’t heard back from so you can close the deal and book the job. Quote follow-ups are 100% automated if you use Jobber.

If a customer hasn’t responded to a quote, Jobber will automatically email or text them a friendly reminder after a set amount of time of your choosing.

If you’re not automating your follow-ups with a service business software, you can set reminders in your calendar.

When to adjust your junk removal pricing

There are a few factors that you should keep an eye one which can impact your pricing strategy:

  • The economy
  • Changing wage expectations
  • Competition: as market rates change, you need to change with them
  • New dump fee costs: the city can change its costs for garbage waste, scrap metal, electronic waste, and hazardous waste, costing you more to drop-off junk.

Think of what you might be missing if your time estimates are consistently wrong.

For example, consider whether you factored in loading time. This can be influenced by the types of buildings you often work with like large homes or condominium complexes.

Remember, your pricing strategy isn’t static. Reassess it regularly and make changes to your strategy when necessary.

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