Pricing can be a puzzle, but a simple formula of adding up expenses can help you find the right margin
One of the hardest decisions for a new portable restroom business is pricing. Charge too little and you are losing money every day. Charge too much and you will never build up your customer base. Just like Goldilocks, you need to find the price that is just right.
There are many components to take into consideration. Just off the top of my head, that includes deodorizer, toilet paper, diesel, driver salary, and the wear and tear on the actual unit.
But there are so many more variables to consider. You have the salary of the person in the office who took the order. You have to pay the dispatcher who made sure that toilet made it on a truck and onto a weekly route. If the customer found your company through a Google search, then technically your Google dollars have to be covered in pricing too. Basically, with enough time, you can come up with a giant list of costs that you can never cover.
So you have to be smart about pricing and streamline the process. If you can, find out what your competitors are charging. This may feel a little sneaky, but you really need to know the pricing range for your area that you have to fit in.
When deciding what costs to attribute to this equation, an accountant can really pinpoint this with you. But for those of you just starting out, save yourself the money and give this a try:
Take one truck from your routes. What does that driver make per week and how many services does he do? That is a great starting point for cost.
For example, lets say this driver makes $15 per hour. This week he worked 41 hours and did 263 services. That means each service was $2.34. On top of that, you had to dump the waste, so consider dumping fees. One of our local dumps charges 9 cents per gallon to dump. Assuming every toilet was almost full, that would be around $6.30 to dump each restroom. Now your service fee is at $8.64. Add in the cost of blue and toilet paper (estimating around $1) and you are at $9.64 a service. So for a month, that restroom costs $38.56.
Obviously there are more costs you should consider, but if you are charging $100 a month for a restroom, clearly you are covering yourself. Obviously everyone’s costs are different depending on location, suppliers and size of routes. But this is a pretty standard formula that applies to most businesses.
Take the time to do the math and see where you stand. Are you pricing yourself out of business?
About the author: Alexandra Townsend is co-owner of A Royal Flush, based in Philadelphia.