How Much to Charge: A Never-Ending Debate

Every portable restroom operator must find the pricing sweet spot that’s profitable and competitive. Go too low, and you kneecap your business, stifling growth or losing money. On the other hand, charging too much can prevent you from building your customer base.

The bottom line is that pricing is subjective and differs by region, market, and service. Only you can decide what prices make sense for your company. However, understanding pricing strategies and structures can help determine how much to charge. This guide breaks down this complex topic by looking at weekly and monthly costs, economic considerations, and price adjustments.

At a Glance: Standard Portable Restroom Pricing

Seasoned PROs strongly recommend assessing your financial commitments and market when establishing prices. Like many goods and services, it isn’t always an apples-to-apples comparison when looking at weekly or monthly fees. One company may charge $85 monthly in a low-cost living area and add surcharges for mileage, weekly services, or non-cash payments.

Another portable restroom business might charge $160 per 28 days, including weekly service. Construction and event fees also differ, with PROs relying on cost or value-based pricing strategies to determine rates.

Since portable toilet pricing varies widely, setting your fees based solely on these ranges or competitors is impossible. Instead, use the following information to determine what to charge for portable restroom rentals.

Understanding Your Region and Market

Profitability doesn’t come from chasing competitors or setting prices based on what some customers want to pay. However, competitive, regional, and market research helps PROs determine value and communicate pricing structure to staff.

Review Competitive Research

There’s nothing wrong with knowing what your rivals charge for portable toilets. Check out competitor websites and marketing materials for rates, special promotions, or estimates. But don’t assume that they calculated their fees correctly or that your expenses are the same.

Take note of how much information rivals share online and how easy it is to find pricing or request a quote. For example, do competitors have service rate lists or online calculators? Can you chat with a salesperson, or do you need to call for an estimate? Improving customer experiences by offering online pricing and ordering may add value to support higher rental fees.

Assess Your Target Market

Your business plan should describe your ideal customers, including demographics like income levels. High-end events and corporate clients will have different expectations and needs than agricultural and construction customers.

To assist your business down the line, identify target customers with high profit margins. These might include premium units that cost more initially but are more accessible for drivers to deliver and service than toilets placed at rural sites.

Also, decide which clients require the most truck time, often your biggest expense. These sites might be in heavily trafficked lots requiring equipment removals or long wait times.

Consider Regional Differences

PROs with more expansive service areas may divide the space into different regions. In some cases, this requires separate pricing structures. When making this decision, consider fuel costs, wages, and other factors.

Some PROs operating in metropolitan zones charge premium rates for special delivery hours. For instance, event and construction sites in New York City may request early morning or late evening deliveries.

Calculating Rental Unit Fees

To properly price restroom rentals, consider a cost-based strategy. This model looks at the direct expenses related to services plus a percentage of your overhead. Financial statements and route information provide accurate data to develop a flat-rate fee for delivery and service. It’s an excellent way to ensure your rates cover the cost of doing business.

However, some operators prefer to calculate flat delivery fees for smaller orders. In this case, the PRO may look at the costs for a service area and route. Each customer pays a set price determined by how many units fit on a truck, and then the service fee is separate.

Figure Out the Direct Costs

Inventory tracking tools and driver records show delivery and service supplies. When fees vary, use an average or a range to view potential high and low figures. Experts recommend a 28-day billing cycle, but you can also calculate rates based on expenses for any timeframe. Tally the total of these expenses for one base unit.

Examples of direct costs include:

• Deodorizer
• Equipment and unit wear and tear
• Toilet paper
• Dump fees
• Cleaning supplies
• Fuel
• Driver cost per unit

Determine Overhead Expenses

Accounting software makes it quick to calculate your monthly expenses. Knowing the total costs of your bills gives you the figure required to run your business. While it’s possible to cut back on some line items, like reducing your advertising spend, small reductions typically won’t make a substantial difference in the per unit fee.

Use your income statement to find overhead expenses, such as:

• Rent or mortgage payments
• Insurance
• Utilities and phones
• Building and property upkeep
• Payroll
• Legal and accounting services
• Software subscriptions
• Taxes
• Marketing and advertising
• Office supplies
• Business licenses

Unlike direct expenses, which are relatively accurate figures, overhead costs are more challenging to compute. You can use historical overheads or percentage markups. The former model works well with consistent revenue and rental unit types. Take the timeframe’s expenses divided by portable toilet sales to see the per-unit cost.

The simple percentage formula takes the monthly overhead costs divided by sales and then multiplied by 100 to get the percentage. However, suppose your portable sanitation business has multiple income streams and rental types. In that case, you might want to allocate a higher rate to rentals that make up the bulk of your sales, such as standard units, and a lower figure for upsells and add-ons like sinks and sanitizer stations.

Do the Math

Now, you have the direct costs and overhead expenses. Add these together to get the estimated cost per standard unit. Alternatively, you can figure out your pricing per route and driver. To do this, calculate the driver’s hourly rate separately and divide it by how many services they complete during the timeframe.

Set Your Profit Margin

Tracking gross and net profit margins helps PROs monitor their company’s financial health. Find your current gross profit by taking the total sales minus direct expenses. These funds cover the costs of running and growing your business.

Identify your net profit by subtracting direct and overhead costs. These funds symbolize your company’s ultimate profitability. To find both margins, simply divide the result by revenue and multiply by 100 to get a percentage.

Review your return on investment (ROI) from contracts and income statements to determine an acceptable figure. Then, establish a pricing profit margin formula to apply to each rental. Subtract your profit margin (as a decimal) from one. Then, divide your base fee by the result to get your final price.

Establish Your Standard Rate

With these figures, you can set current rates and use financial projections to ensure future profitability.

Let’s look at an example: The business owner calculated that a standard unit must have a base fee of $100 to cover operating costs and direct expenses. The pricing markup per service is 30%.

Here’s how this formula looks:

• 1 – 0.30 = 0.70
• 100 / 0.70 = 142.86

Charging $143 per unit covers this PRO’s bills and returns a healthy profit of $43 per rental. However, the business owner may decide on an even number, like $145, to simplify pricing. They might boost the fee even higher because their customer base will tolerate it. You can play with your markup percentage to see how it impacts pricing and profits or fits into your long-term goals.

Making Sure You’re Not Charging Too Little

While it’s imperative to review all figures when your company or the industry experiences substantial changes, a quick review allows you to identify any problems. Spot-checking a driver’s route doesn’t consider every expense, but it does show you if the route covers necessities. Any red flags may warrant further inspection.

Here’s a standard formula that works for many locations:

• Jack worked 40 hours for $20 hourly, earning $800
• He completed 262 services
• The labor costs are $3.05 per service ($800 / 262)
• Dump fees per unit cost about $7 (70 gallons x $0.10)
• Blue and toilet paper runs around $2

Based on these costs, a restroom on Jack’s route costs $48.20 monthly. When comparing routes and timeframes, you can factor in fuel costs for better accuracy.

Standing By Your Price

Your numbers tell you how much to charge, but customers and employees don’t necessarily want to hear or understand the figures. Instead, setting quality standards and sharing your story will gain trust and get your team on board.

Benefits of Charging the Right Rates

It’s tempting to pursue any client when money is tight. However, many PROs have stories to share about issues that arose after haggling over pricing. You may find that people willing to pay your rates treat your restrooms better, pay on time, and refer more customers.

A profitable portable restroom company also benefits employees. It means job security, higher quality co-workers, and better working conditions. Encourage staff to help you maintain rates by monitoring parts and supplies, conserving fuel, and delivering top-notch customer service.

By ensuring your prices reflect market costs, you can maintain a buffer for emergency expenses or unexpected pricing fluctuations. A healthy profit margin also gives you options when buying a new truck or financing a business expansion.

Experience and Reputation

Startups’ lower overhead costs may allow them to charge cheaper rates initially, which helps build a customer base. They increase trust by putting themselves in the community and fostering relationships. Combine that with reliable services, honest staff, and fair prices to strengthen your brand. Experience lets you increase prices to reflect growth, longevity, and reputation.

Value

Customers always want the best pricing, but their perception of value for the money differs between market segments and even individuals. Establish value by understanding your target audience. Ask the right questions pre-sale and collect customer feedback post-sale. Knowing your customer means you won’t have to defend the price and can explain the value.

Leveraging Pricing Strategies

Successful pricing strategies maximize revenue and profit. They consider business and external factors, like economic trends, consumer demand, and brand positioning. When setting fees, you can combine strategies or swap them out for different segments.

Cost vs. Value-Based Pricing

The cost-plus margin strategy (used in the examples above) is simple and commonly used by small rental businesses. With sufficient monthly toilet rentals, you can break even and make a profit. However, value-based pricing looks at what the customer feels the service is worth.

A contractor needs a portable toilet before work can start, and it’s a standard business transaction. On the other hand, an event planner intends to inspect them and add scented soaps to calm an anxious bride. For the latter, a portable restroom company specializing in events can leverage value-based pricing for professional, high-touch services.

Psychological Pricing

This strategy gives the consumer the impression that they’re getting a deal. For portable restroom companies, discounting toilets or other assets can reduce the client’s perception of quality. Therefore, psychological pricing strategies are better for upsells, add-ons, or seasonal promotions.

Let’s say you want to draw attention to your standalone hand sanitizer or washing stations. To that end, you could offer free accessory delivery when adding it to any one-month rental.

Volume Pricing

PROs may offer deals or work with certain clients to reduce fees based on the number of units rented. The discount should still cover your supply costs and markup when taking this approach. The difference is that you recognize that your servicing time and delivery costs may be lower since you have multiple toilets in a single location.

Adjusting to Economic Conditions

Your standard pricing should be solid enough to handle typical economic price fluctuations. But startups and companies with slim margins are less able to financially manage ongoing issues. Higher business costs aren’t always predictable or related to one incident.

Wages

Maintaining a healthy margin provides the capital to hire and retain the right people. Wage increases in your region may mean you need to boost rates to remain competitive. Alternatively, as your company grows or adds new revenue streams, you may want to attract individuals with more experience or different skill sets.

Fuel

When pricing jobs, many PROs consider factors like slow-going terrain or long-distance travel. They also use routing software to increase fuel efficiency. However, even with these measures, fluctuating gas and diesel rates can wipe out profits when not watched closely. Therefore, knowing when to pass fuel costs to customers is essential.

The Energy Information Administration (EIA) provides average retail prices, and some PROs set a base fuel cost at the beginning of the year. They may charge a surcharge when rates go above this amount.

Inflation and Supply Increases

Whether it’s inflation, recession, or other market concerns, your business must weather them all to survive. Monitoring your costs is the first step to protecting your company. Strategic investments and rate increases allow you to maintain your margin while meeting long-term goals.

Processing Charges

Credit card processing fees should be built into your business operating costs. However, it’s not unheard of for major card networks to boost rates mid-year. These figures look small on paper, less than a percentage point, but small businesses operating on slim margins could be impacted.

While you don’t want to nickel and dime your clients, drawing attention to these costs is becoming more acceptable. Your merchant account provider may offer a surcharge fee saver program, where you can pass the fee on to clients, or you can offer a cash or ACH payment discount to reduce processing costs.

Handling Price Increases

No one wants to pay more for the same services, and many customers don’t understand the business side of the situation. Even if you have the best, most understanding clients, it’s vital to compose a clear message that you will convey to your staff and customers.

Focus on what increasing prices allows your business to achieve. For instance, higher rates ensure you can continue to deliver high-quality services, pay decent wages to your drivers, and use supplies that are guaranteed to work instead of cheaper, off-brand solutions. Also, point out any highlights to clients, such as if your company recently invested in new equipment, expanded its hours, or hired more technicians.

When possible, notify clients a month or two before rates increase. Also, encourage them to contact you with concerns or questions. Remember to provide your staff with information so they can respond appropriately. They should sympathize with the client without positioning your business as a downtrodden victim.

Navigate Portable Restroom Pricing Like a PRO

Profitable PROs cover their costs by pricing units correctly. Your chosen method doesn’t need to be complex, but you should review it regularly and consider offering pricing transparency to earn your customer’s trust. This topic is truly one that is always up for debate, and although we covered many factors and strategies, dozens more options exist. Financial consultants, industry professionals, and coaches can help PROs evaluate costs and pricing to improve their approach.

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