How would you feel if you found out your neighbor was paying less for the exact same service from the exact same company?
How would you feel if it was 5% less than what you paid? 15% less? 37% less than your current price?!
That’s exactly what happens in the waste industry and I have real life proof. I’m going to break down two waste invoices by line item. These invoices are from two neighboring businesses who have the exact same service levels from the exact same company.
These businesses even share an alley and their dumpsters (check the addresses) are only a few doors away from each other. I want to show you how waste companies make it hard for consumers to determine if they are getting a good deal or not.
While the dollar amounts are small in my example, the principle holds true throughout the waste and recycling industry. There is no standardized pricing for waste and recycling services.
- Municipal refuse container fee
An ordinance was passed in Chicago that allows the City to collect a fee for each commercial dumpster in its alleyways. Commercial waste haulers are required to obtain the permit, but they pass along this cost to their customers. The fee varies depending on the cubic yards of the container, more information can be found here. By looking at this invoice, we see a charge of $11. This translates to one 2-yard dumpster.
- 2 Yard dumpster service
This is the ‘base rate’, what you are charged for your service before fees or taxes. Look at the invoices, the line item that says ‘2 Yard dumpster service’. What does that mean? We know there is one 2 yard dumpster by referencing the ‘municipal refuse container fee’. But do we know how many days this dumpster is picked up? No and that is on purpose. Haulers use this tactic to keep you from easily comparing prices. One business pays a base rate of $35 and one pays $62.91, it’s the exact same service but at a 44% difference. We might assume one business is getting another day of service since their price is higher, but in reality this is not the case.
- Fuel / Environmental Charges
Take a look at the next line item ‘Fuel / environmental charge’. This charge is for, “rising fuel prices and costs related to environmental compliance are things we cannot fully control. Our standard fuel/environmental charge is meant to help us cover these increased costs and achieve an acceptable operating margin.” In our examples each company pays 31% of their base rate towards the ‘Fuel / environmental charge’. But, when your base rate is higher, you pay more. They are paying more for ‘rising fuel prices’ and ‘costs related to environmental compliance’ even though the service they receive is the exact same.
- Regulatory cost recovery charge
“We assess a Regulatory Cost Recovery Charge on customer invoices, currently 3.6% of all invoice charges, excluding taxes…This charge allows us to cover our overall company-wide costs associated with host community fees, waste disposal taxes and similar charges that we pay to municipal or other governmental authorities or agencies to engage in the waste collection, transfer, processing, disposal, treatment and/or recycling business, and to achieve an acceptable operating margin.”
As I showed you in the Fuel / environmental charge, if your base rate is higher, all other fees will be higher, even though your service is the same.
- Administrative Fee
“The administrative charge covers the cost of generating your paper invoices and processing your payments. To avoid this charge, enroll in paperless billing and sign up for automatic payments.”
This is a standard fee all customers get, but it can easily be avoided by enrolling for online account access and stopping paper billing.
- Further proof:
In 2008 the City of Chicago did a study on the waste haulers operating in the city. They asked over 1,800 businesses what size dumpsters, how many dumpsters, and how often they were picked up. Here is what they found:
- What does all this mean?
Great question. It means that waste haulers purposefully keep their pricing structures opaque. They make it hard for customers to determine how much value they receive from their agreement relative to the rest of the market. It means that waste haulers have no reason or motivation to reduce your costs or provide standardized pricing to their customers. It means that it’s hard to get a true apples-to-apples comparison between waste hauling companies, as each has their own way of charging customers ‘to achieve an acceptable operating margin.’
It means your neighbor may be paying 37% less than what you are.
Wastemaster is designed to serve businesses by bringing pricing transparency to the waste industry.