Most businesses know how much they spend on commercial waste hauling each month. But far fewer know whether that number is actually competitive.
Here’s what typically happens: Your hauler sends an invoice, the total looks roughly consistent with last month, and the bill gets paid without much scrutiny. Unless there’s a drastic price increase or obvious problem with your service, there’s rarely a reason to question things.
But your monthly total doesn’t tell you whether you’re getting a good deal.
A $1,000 commercial waste bill could be highly competitive for one business and highway robbery for another. It depends on so many factors, which is where benchmarking comes into play.
What Exactly is Commercial Waste Cost Benchmarking?
Commercial waste cost benchmarking is the process of comparing your current rates and service levels against a meaningful reference point.
Examples points of reference you might use for this exercise include:
- Your own invoicing history
- Similar locations within your organization
- Quotes from competing haulers
- Data on what comparable businesses in your market are paying
The goal is to create context behind your waste costs. Because without context, you’re essentially operating on good faith that your hauler is pricing you fairly.
Tracking your monthly spend alone is not benchmarking. Let’s say you spent $1,200 last month on waste hauling. That number doesn’t really tell you anything. But if you compare it against what similar businesses pay, what you paid two years ago, and whether you’re actually using the service you’re paying for, it will tell you if that number makes sense.
Factors That Affect Commercial Waste Hauling Rates
There is no universal rate for commercial waste hauling services. That’s why benchmarking is such an important part of understanding your costs.
Rates and fees vary significantly based on factors that your hauler controls and some that they don’t. Here are some variables that affect what you pay:
- Your location and local disposal costs
- Distance from the nearest disposal facility
- Local competition between haulers (or lack thereof)
- Whether you’re in a franchise or open market
- Container size and quantity
- Pickup frequency
- Waste type and weight
- Fuel, environmental, and administrative surcharges
- Contract terms and rate escalation language
Even similar businesses in the same city can receive drastically different rates depending on when their contract was signed and how it was negotiated. That’s why your monthly total, without context, doesn’t tell you much.
Establish What You’re Actually Paying For
Before you start making any comparisons, you need a clear baseline.
Pull at least 12 months of invoices and document the full picture for each location: container sizes and quantities, scheduled pickup frequency, waste streams being collected, base service charges, and every recurring fee on the invoice.
You should also confirm whether the service on your invoice accurately reflects what’s happening on the ground.
It’s not unusual to find that a location is being billed for a pickup schedule that hasn’t been adjusted in years or for a recycling service that’s barely being used. Your hauler is never going to contact you to tell you that you’re paying for something you don’t need.
Once you have a firm grasp of your full service configuration, you can move on to compare one rate to another.
Compare Against the Right Reference Points
Running a few different comparisons gives you more insight than any single point of reference can. And depending on your business type and operation, some benchmarks will definitely be more relevant than others.
We can separate these into three main categories: historical, internal, and external.
Historical Benchmarking
Compare your current costs against previous periods. Look for:
- Gradual increases to the base rate
- New fees that have appeared over time
- Surcharge percentages that have crept up
A 5% increase in any given year may not seem like a big deal. But repeat increases over a multi-year contract can add up fast. And your current rate can still look “normal” compared to last year while you’re still paying well above what you should.
Internal Benchmarking
This works best for multi-location businesses, as the best benchmarking data is sitting within their own invoices. Multi-location restaurants, property managers, and hotels are often charged very different rates at each facility, which is sometimes justified.
But locations with similar waste profiles should have broadly comparable waste costs when normalized for those differences. Go through your invoices to see which locations have similar:
- Container sizes
- Pickup frequency
- Building sizes
- Customer volume
Any major gaps between those locations are worth investigating further. Sometimes local market conditions explain things. But other times, it could be a contract that wasn’t negotiated properly or a hauler taking advantage of your lack of attention to detail.
External Benchmarking
Look at what competing haulers are willing to offer for the same service. I’m not saying you should consider switching (you usually don’t have to). But it gives you leverage to know what’s out there, and it’s often the cleanest way to determine whether your current rate is competitive.
Just make sure any competing proposal is reviewed carefully, as an attractive base price may not account for percentage-based surcharges, automatic annual escalations, or fees that weren’t included in the total.
Your ability to shop competing bids also depends on your market. Businesses in open markets have more options than those in franchise territories, where a single hauler may have exclusive rights to your area.
You should also review your existing contract for any right-to-match or right-of-first refusal language before you solicit competing proposals, as this could limit what you’re able to do with another offer even if one is available.
Use Cost Metrics That Make Comparisons More Meaningful
Beyond total spend that you’re benchmarking, it’s also helpful to track costs against more specific metrics.
- Cost per scheduled pickup
- Cost per ton
- Cost per yard
- Cost per location
The right denominator here is going to depend on how your business operates. For example, an apartment property might calculate their cost of waste per occupied unit, whereas a hotel may get value tracking waste costs per occupied room.
Consistency is what matters most here, though. Once you have a calculation, you need to apply it the same way across each period. That’s how you can uncover trends.
What to Do When You Find a Gap
If there’s a gap between what you’re currently paying and the benchmarked cost, you need to have a conversation with your hauler.
Get specific here. Coming to the negotiation table with clean numbers based on a real audit puts you in a much stronger position than simply asking for a reduction because your bill feels too high.
From there, put some pressure on your hauler to make things right. It’s typically not in your best interest to find another hauler and that shouldn’t be your goal.
Businesses that benchmark catch rate creep sooner, have stronger negotiating power, and ultimately pay less over the lifetime of their waste hauling contracts.
If you need help making sense of what you’re currently paying and how it compares, The Cost Guards can help you out. We can also compare your rates against real businesses with a similar waste profile, which is an advantage you wouldn’t have access to on your own.