Guides
Junk removal break-even formula: the inputs and how to read it
The junk removal break-even formula in loads per truck-day: where each input comes from, what belongs in fixed cost and how to read the result.
What to take away
- Break-even is a counthow many loads each truck-day must carry before the fixed costs are paid.
- The answer is fixed cost divided by contribution per load and by the truck-days you work.
- Each input comes from a document you already holdthe scale ticket, the crew clock, payroll and your fixed-cost statements.
- The result only means something beside what one truck can physically do in a day.
- Nothing on this page is a benchmark.
Seven variables, written down once
The break-even math needs seven inputs, and every one comes from your own records. Write them down once and reuse them in each calculation.
Variables to define once
- P: price per load fraction
- D: disposal cost per load
- H: crew hours per load
- L: loaded hourly cost
- F: fixed monthly cost
- N: loads per truck-day
- T: truck-days per month
- Pis the price you charge for one load fraction, at whatever fraction you sell most.
- Dis the disposal cost of that load: weight tipped times the facility rate, plus any stream fee, never less than the facility minimum.
- His the crew hours that load consumed, from arrival at the customer to departure from the scale.
- Lis your loaded hour: wage, employer burden, vehicle cost and overhead share, per productive hour.
- Fis fixed monthly cost that exists whether or not a truck rolls.
- Nis loads completed per truck-day.
- Tis truck-days worked per month.
Contribution per load comes first
Contribution is what one load leaves behind after the costs that exist only because you did that load. The daily target rests on it, so get it right before you divide anything.
Three job shapes, three answers
Furniture removal
- Density
- Light
- Disposal cost
- Low
- C per load
- Run separately
Construction debris
- Density
- Heavy
- Disposal cost
- High
- C per load
- Run separately
Inside cleanout
- Density
- Mixed
- Disposal cost
- Variable
- C per load
- Run separately
C = P minus D minus (H times L)
A business with a good-looking revenue line and a negative C is losing money faster the busier it gets. Run C separately for your three most common job shapes. A furniture removal, a construction debris load and an inside cleanout will not have similar answers.
Two mistakes appear the first time owners compute C. They use the wage instead of the loaded hour, which understates the labor term badly. And they use an average disposal cost rather than the actual ticket.
The daily target
Fixed cost has to be carried by contribution, so the monthly break-even in loads is F divided by C. Divide that by the truck-days you work and you have the daily target.
Daily break-even in loads
F / (C x T)
F is fixed monthly cost
C is contribution per load
T is truck-days per month
Loads needed per truck-day = F / (C times T)
That is the number to put on the wall. It converts an abstract monthly figure into something a dispatcher can act on before lunch.
Read it by direction. Raise C and the target falls. Work more truck-days and the target falls. Add a fixed cost and it rises. Each lever is visible in the formula before you spend anything on it.
Where each input comes from
Every input has a document behind it. If you cannot point to the document, the number is a guess and the target built on it is too.
| Input | Document it comes from | Check before you use it |
|---|---|---|
| P | Signed estimate or invoice | Same load fraction as D and H |
| D | Disposal facility ticket | Actual weight and stream, not an average |
| H | Crew clock or dispatch log | Arrival to release at the scale |
| L | Payroll, vehicle and overhead records | Divided by productive hours only |
| F | Insurance, loan, software and rent statements | Every line, including your draw |
| N | Dispatch log | Loads completed on a normal day |
| T | Calendar | Days a truck actually rolled |
What belongs in F
List fixed cost line by line, because a missing line makes the target look easier than it is. Fixed cost is anything that exists whether or not a truck rolls.
- Insurance and vehicle registration.
- Software, phone and rent.
- Loan payments on the truck, trailer and gear.
- Permits and any hauler credential your area requires.
- Your own draw, if you take one.
Costs of registration, permits and credentials depend entirely on where you operate, which the licensing and compliance guide explains how to establish. The overhead that rides on each productive hour belongs in L, and the bookkeeping setup shows how to keep the two apart.
None of this works from memory. You need the quoted amount, the scale weight, the crew clock and the disposal ticket per job. The IRS says that good records help you keep track of deductible expenses and support items reported on your tax returns.
Reading the result
Compare the loads-per-truck-day result with the loads one truck can physically complete in a day. That comparison, not the raw number, tells you what to do next.
| Result against what a truck can do | What it means | Next step |
|---|---|---|
| Below your usual N | Fixed cost is covered on a normal day | Confirm C was run per job shape |
| Close to the most a truck can do | No slack: one slow disposal run puts you under | Raise C or T before adding fixed cost |
| Above what a truck can do | The inputs are wrong, not the arithmetic | Use the shortfall table below |
When the target is more than a truck can do
A target higher than the loads a truck can physically do in a day is a real problem, not an arithmetic one. Either P is too low, D is too high for what you are hauling, or H is being spent somewhere other than loading.
| Shortfall | How it shows in the variables | What to change |
|---|---|---|
| Dense loads sold at furniture prices | D rises, P does not | Price heavy streams as their own category |
| Stairs and long carries absorbed | H rises, P does not | Name them as additions at the estimate |
| Unconverted estimates | H spent on jobs with no P at all | Qualify harder on the phone |
Drive time spent on an estimate that does not convert is real cost with no offsetting revenue. It belongs in L rather than being treated as free. The estimate sequence that reduces it is in the article on pricing a job for a fair margin.
Why drive time moves the target
H is not the time your crew spends carrying. It is the whole span from arrival to release at the scale, and in most markets a large share of that is driving and queueing.
Drive time eats contribution
20 min to transfer station
- Extra drive per load
- Baseline
- Effect on H
- Lower
- Effect on C
- Higher
50 min to transfer station
- Extra drive per load
- 30 minutes
- Effect on H
- Higher
- Effect on C
- Lower
Two operations with the same rate card and the same wages break even at different points. One is twenty minutes from the transfer station, the other is fifty. The second one buys thirty extra minutes of L on every single load, which comes straight out of C.
Three responses work. Batch jobs so one facility trip covers more than one customer, where streams allow it. Divert what you can, since a donated or scrapped item never enters D at all.
Accept that your service radius has an economic edge. Where that edge sits is a market question, and your own scale tickets will show it before any benchmark could.
Getting L right
The L term is where new owners guess and get it wrong, so build it from a defensible wage upward.
Build the loaded hour
- Start with a defensible local wage
- Add employer burden
- Add vehicle cost per productive hour
- Add overhead share
- Divide by productive hour fraction
Start with a defensible wage for physical work in your area, not what you hope to pay. The Bureau of Labor Statistics' occupational wage estimates are available for individual states and for metropolitan and nonmetropolitan areas, which gives you a floor.
Then add employer burden, vehicle cost per productive hour and the overhead share. Divide by the fraction of paid hours that are actually productive.
Underpaying does not lower L in practice. It raises turnover, which raises training cost and the rate of damage claims, and both land back in F. How L feeds a quote is a pricing question, set out in the pricing method.
Common questions
What if C is positive but I still cannot pay the bills?
Then F is too high for your volume, or T is too low. Look at truck-days actually worked before you look at the rate card.
Should I count my own labor in L?
Yes, at what it would cost to replace you. An owner-operated business that looks profitable only because the owner works free has not found a margin, it has found a job.
How often should I recompute the target?
Whenever the facility changes its rate schedule, whenever wages move, and once before your busy season. Those are the three events that move the terms.
Is there a normal margin for this trade?
Not one anybody can hand you. Disposal rates, wages and drive distances vary too much between markets for a single figure to mean anything.
Does diversion improve margin or only the ethics?
Both, sometimes, and neither automatically. It removes weight from D but adds time to H. Measure the two together on real jobs before you decide.
