Should You Charge A Fee For Scrap Metal Removal?

Here's how to do a thorough scrap metal removal fee assessment.

Lots of people think that just because scrap metal has some monetary value, and people just “give it away” that you're obligated to provide scrap metal removal services for free.

This is only true if you don't care about whether or not you're actually losing money... Which is VERY easy to do.

We created a worksheet for SMF members to will help you evaluate how much a scrap metal removal job is REALLY worth to you, by systematically calculating your costs vs your earnings according to some simple variables.

But first let's look at how to use it and how it can help you.

In my opinion, no scrap metal removal job is too small, you just need to charge a fee to make it worth it.

The trick is getting the fee 'just right' so you always earn AT LEAST what you're worth, without accidentally over-charging the customer and losing the job.

You're never losing out by offering a fee for your service to a customer who doesn't have enough scrap metal for a free removal, but you will ALWAYS lose out when you flat-out turn a customer down.

First let's look at the costs we need to factor into our assessment.

COSTS

• Fuel
• Man hours spent driving
• Man hours spent on job
• Man hours spent “breaking down”
• Materials like blades, cutting discs, drill bits.

All of those things cost money, and they can eat away at the profits from your scrap pretty quick if you're not careful.

So let's create an example situation to create a practice scrap metal removal cost assessment.

Our fictional example job:

You'll be picking up 4 large household appliances (1 stove, 2 washers and a dryer), and a couple hundred lbs of weight equipment.

The scrap is located about 30 miles away (30 minutes), and you'll be bringing along a helper to assist in loading the scrap. There won't be any breaking down or extra materials such as blades required. We'll also assume that it should take about an hour to get everything loaded up and be out of there.

Looks like it could quality for a free removal right? Let's find out!

Ok, so we have a general understanding of the job, let's start factoring costs...

Fuel – First you need to know how much your fuel will cost.

To start off you'll need to know your vehicle's MPG (miles per gallon).
(If you don't know how to calculate your MPG, go here: https://www.google.com/search?q=how+to+calculate+mpg)

Let's assume you'll be taking only 1 truck, it gets 20mpg on average, and the cost of fuel is currently $3 per gallon.

The job is 30 miles away and you get 20mpg, so you will consume 1.5 gallons of gas EACH WAY (30mi / 20mpg), for a total of 3 gallons of gas.

3 gallons x $3/gallon = $9

Total cost of fuel is $9

Next you need to figure out how much our man hours are worth, for both you AND your partner/helper.

The first step to this is determining WHAT YOU'RE WORTH, per hour.

If you haven't done so already, place an hourly wage on yourself and your helper, separately, right now.

Let's assume that your hourly wage is $20, and your helper's hourly wage is $15. It's important to put a value on yourself.



Next, you need to estimate how many man hours it will take to complete the job.

If you ARE going to include drive time in your man hours, calculate your total hours by adding together the following estimated values:

• Total hours to job x2 (don't forget the drive back)
• Total hours on job
• Total hours spent breaking down (if any)

If you are NOT including drive time in your man hours, calculate your hours using the following estimated values:

• Total hours on job
• Total hours spent breaking down (if any)

Total them all up. We will charge for drive time in this example.

For our example job, we have a total of 2 man hours (2 total hours per person. 1 total hour worth of driving, 1 hour on the job).

We won't be breaking anything down and we don't need any materials like blades to get the job done so we can skip that.

Next we need to calculate the total cost per hour, which is the sum of your hourly wage AND your helper's hourly wage.

In our case our total cost per hour is $35 per hour ($20 for you + $15 for your helper = $35)

So you have 2 man hours to account for at $35, so for our example job, including drive time, the cost of man hours comes to $70 (2 hours x $35/hour).

Now we need to add our cost of FUEL to our cost of MAN HOURS and we have the 'true' cost for this scrap metal removal job.

Cost of fuel = $9

Cost of man hours = $70

Total cost for removal job = $79

Ok, great, you know how much you have to make AT A BARE MINIMUM from the scrap in order for it to qualify as a “free removal”.

So the next step is to estimate how much the scrap is actually worth.

To do this, assuming it's all light iron (regular steel) you just need to know the steel price per ton and make a good guess at how much the scrap weighs.

Let's assume that scrap steel is going for .06/lb, which is about $130/ton.

We'll also assume that all 4 of the appliances each weigh about 100lbs, totaling 400lbs, and exercise equipment is 300lbs. This gives us a grand total of 700lbs.

At .06 cents per pound, the value of our scrap is only about $42!

With a total cost of $79 to even DO this job, and only $42 in scrap value means you're actually losing almost $40 if you remove this scrap for free! ($42 for scrap - $79 for hours/fuel = $37 loss)

You have to charge a fee of AT LEAST $37 to earn what you deserve.

Does all of that make sense?

Our example job looked like it would make a few bucks, but that wasn't the case.

Don't always assume that just because it's “free”, that it's worth it.

As time goes on you'll be able to do this all in your head on a whim, but sometimes it helps to see it in a visual or even PHYSICAL form to make it easier to estimate the actual profitability of your scrap metal removal business.

So attached is the Scrap Metal Removal Fee Assessment Worksheet, which you can use to quickly and easily do fee or free assessments before you commit to any local or long distance scrap metal removal projects.

Feel free to download and print as many copies of the document linked below as needed to help you out. You might find it useful to print out a bunch and fill one out every time a prospective customer contacts you to request your services.

Worksheet is available on your downloads page: https://www.scrapmetalforum.com/smf-...-downloads.php

Great post. I would add that some people will scoff at you for charging. It IS ok to walk away at that point. Once you set a precedence of "doing a guy a favor", that precedence will spread like wildfire and you might as well quit.

Let me bring up another idea for those who are in areas that can't charge: Collection events.

Before the market slowed, I did a few of these. We'd get permission to use a parking lot (Churches, schools, and radio stations worked well for us). We would run ads and bring a truck and trailer by. The problem is that you're paying for stuff essentially, because of advertising costs. But, when the prices rebound, it's a great solution for E-Waste. Even a town of 10,000 people was able to fill half of my 15' box van.

I am not really in this space, but what about a consideration for free pick up, but "gratuity" is accepted? or a simple stop fee?

Just some thoughts... the admin's post covers alot of the costs we don't regularly consider... this is the most important market to get a handle on them!

I charged one time.

To remove a fridge from a kitchen. See the problem I think, in my opinion, is when people are getting charged for a service, they come to expect you to do the job flawlessly, without damaging anything (which is perfectly acceptable). And if you do chip the paint on a doorway while squeezing a fridge through it after you had to take the fridge doors off to make it an extra tight fit, you will be expected to fix it.

Now if it's a free service, you can't be expected to be "professional" in every aspect of what you're doing, and people tend to be more forgiving about small stuff.

I always advertise as free pick up. Even if I have to drive 20 miles to pick up a water heater. You hope by doing this (and giving a business card), you are going to be getting a repeat customer.

Even with steel at $60/ton, I still offer free.

To each their own.