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Key Takeaways
- Fixed overhead and payroll for a garbage collection business average approximately $54,850 per month in 2026, excluding variable expenses.
- Payroll constitutes the single largest fixed commitment, consuming $41,000 monthly for essential crew and management salaries.
- Due to a projected $292,000 Year 1 EBITDA loss, the business requires significant working capital to survive until the projected cash flow breakeven point in May 2027.
- Extreme variable costs, specifically Disposal Fees (140% of revenue) and Fuel (90% of revenue), demand aggressive route optimization and volume tracking to achieve positive contribution margins.
Running Cost 1 : Disposal (Tipping) Fees
Tipping Fees Are Margin Killers
Tipping fees are your biggest threat, projected at 140% of revenue by 2026. This means you lose 40 cents for every dollar earned before accounting for fuel or labor. You must track landfill rates and volume daily to fix this margin collapse defintely.
Estimating Disposal Costs
Tipping fees cover hauling waste to landfills. You need to know your projected volume and the exact landfill/transfer station rates. Given the 140% projection for 2026, current pricing assumptions are broken. You need granular data on weight or volume per route to calculate the true variable cost.
- Track volume hauled weekly.
- Get quotes for disposal rates.
- Model impact on contribution margin.
Managing Fee Exposure
You can't eliminate tipping fees, but you must control them better than 140% of revenue. The main levers are route density and diversion rates. If you haul air or pay high landfill rates for recyclables, margins vanish. Negotiate bulk rates if volume justifies it, but focus first on accurate hauling.
- Increase recycling diversion rates.
- Audit landfill invoices monthly.
- Optimize truck loading capacity.
The Margin Reality Check
The 140% variable cost in 2026 is unsustainable; it dwarfs other major costs like fuel (90% of revenue). You must immediately stress-test your current subscription pricing against realistic disposal rates, or you won't have a positive contribution margin.
Running Cost 2 : Fuel Costs
Fuel Dominance
Fuel burn is the single biggest threat to your contribution margin next year. With fuel consuming 90% of revenue in 2026, efficiency isn't optional—it's survival. You must lock down route density and track miles per gallon (MPG) daily across the entire fleet.
Cost Inputs
This cost covers diesel or gasoline consumed by the collection trucks. To model this accurately, you need projected annual mileage, expected average MPG for the specific truck models used, and the projected average price per gallon. If revenue hits the target, fuel spend will be massive. Honestly, this is defintely where you bleed cash.
- Projected fleet mileage.
- Expected MPG efficiency.
- Average fuel price ($/gallon).
Optimization Levers
Since fuel is 90% of revenue, even small MPG gains matter hugely. Focus on minimizing deadhead miles (driving without a stop). Poor route planning is effectively throwing away cash. If your drivers are idling excessively, that's wasted fuel you can't recover without intervention.
- Tighten route density daily.
- Monitor driver idling time.
- Benchmark against industry MPG.
Risk Exposure
If your 2026 revenue projection drops by just 10%, fuel costs still consume 81% of the remaining revenue. This expense leaves almost no margin for error in pricing or operational execution. You need a fuel surcharge mechanism ready to deploy immediately.
Running Cost 3 : Wages and Salaries
Payroll Dominance
Payroll is your single biggest fixed drag on profitability, hitting $41,000 per month in 2026. This cost is anchored by the $55,000 annual salary paid to every Driver and Collection Crew member. You need tight control here, as this expense scales directly with hiring plans, not just revenue. That’s defintely where the cash goes first.
Crew Cost Drivers
This $41k monthly payroll covers the frontline team executing collections and hauling. To calculate this, you multiply the $55,000 annual salary by the number of required crew members, then divide by 12 months. If you plan for nine drivers/crew in 2026, this math quickly hits the target figure, ignoring benefits and payroll taxes for now.
- Salaries are fixed obligations.
- Crew size dictates overhead.
- Base pay is $4,583/person monthly.
Controlling Headcount
Managing this fixed cost means optimizing routes to reduce overtime and maximize efficiency per driver hour. Avoid hiring ahead of route density needs; every extra body adds $4,583 monthly minimum before benefits. Standardize job roles to prevent scope creep that inflates required staffing levels and slows down service times.
- Benchmark utilization rates.
- Limit non-revenue generating time.
- Negotiate benefits packages early.
Fixed Expense Risk
Since wages are fixed, they must be covered regardless of service volume fluctuations. If revenue dips unexpectedly in Q3 2026, this $41,000 monthly payroll becomes a significant cash flow pressure point. You must maintain high utilization rates to absorb this overhead before variable costs like tipping fees eat your margin.
Running Cost 4 : Fleet Insurance
Fixed Fleet Cost
Fleet Insurance sets a hard monthly floor of $4,000, making it a non-negotiable fixed expense for your vehicle operations. You must review coverage limits and driver safety annually to keep this critical cost manageable.
Cost Structure
This $4,000 monthly charge covers liability and physical damage across the entire waste collection fleet. It’s a fixed cost, meaning it doesn't change with daily routes or volume, unlike fuel or tipping fees. You need current vehicle schedules and driver history reports to get accurate quotes for the annual policy.
- Covers all scheduled collection vehicles.
- Fixed cost, budgeted monthly at $4,000.
- Requires annual policy audit.
Premium Control
Controlling this expense hinges on proactive risk management, not just shopping rates at renewal. A clean safety record directly lowers your risk profile, which insurers reward with lower rates. If driver onboarding is slow, it delays proving driver quality to underwriters.
- Tie insurance discounts to driver safety scores.
- Review coverage limits versus fleet replacement value.
- Negotiate multi-year contracts for stability.
Risk Linkage
While insurance is fixed, its stability is tied to variable performance metrics. If driver incidents spike, premiums defintely jump next renewal cycle, potentially offsetting savings gained from route optimization efforts on fuel costs.
Running Cost 5 : Office and Depot Lease
Facility Fixed Costs
Fixed facility costs total $5,500 monthly, covering both the office space and the essential depot lease. Given this is a significant overhead before generating revenue, securing favorable, long-term lease terms is critical for stabilizing early operational budgets.
Cost Breakdown
This $5,500 covers two distinct physical needs: the $3,500 office rent for administrative staff and the $2,000 depot lease for truck staging and equipment storage. These are fixed overheads that must be covered regardless of collection volume. You need quotes for both locations to build the budget.
- Office rent: $3,500 monthly.
- Depot lease: $2,000 monthly.
- Total fixed facility cost.
Lease Management
Since this cost is fixed, focus on locking in favorable rates now. Try negotiating a 5-year lease term for the depot to secure the $2,000 rate against future inflation; this is defintely achievable if you show solid projections. Avoid short-term leases that expose you to immediate rate hikes.
Location Strategy
Location choice directly impacts the depot lease; proximity to service zones affects fuel efficiency, which is another major cost driver. Ensure the depot location minimizes driver commute time to offset the high fixed facility spend.
Running Cost 6 : Vehicle Maintenance (Variable)
Variable Maintenance Hit
Vehicle maintenance isn't fixed; it scales with your routes. Expect variable maintenance costs to consume 35% of revenue starting in 2026. This reflects the real-world impact of heavy usage and aging trucks on your bottom line. That’s a significant chunk of gross profit gone right there.
Tracking Wear
You need granular data to forecast this 35% accurately. This cost covers routine service, unexpected repairs, and tire replacement driven by miles logged. Input needed includes total fleet mileage and the average age of your collection vehicles. If your fleet ages past five years, expect this percentage to climb fast.
Cutting Repair Spend
Managing this variable cost means aggressive preventative scheduling. Don't wait for a breakdown; schedule service based on operational hours, not just calendar dates. A strong maintenance plan can keep this below 35%. Avoid using cheap, unvetted mechanics; their poor work defintely raises long-term costs.
Cost Context
Look at the other variables hitting your revenue hard. Fuel is 90% of revenue and Tipping Fees are 140% of revenue in 2026. At 35% maintenance, your contribution margin is getting squeezed severely before you even cover fixed overhead like $41,000 in monthly payroll.
Running Cost 7 : Customer Acquisition Cost (CAC)
CAC Target Setting
The $150,000 marketing spend planned for 2026 targets 1,250 new residential customers by holding the Customer Acquisition Cost (CAC) to $120 each. This investment is crucial for scaling subscription volume against high variable costs like tipping fees.
Budget Allocation
This $150,000 annual marketing budget is categorized as a running cost for 2026, focused solely on growing the residential base. Achieving the $120 CAC requires tracking all spend—digital ads, local flyers, and sales commissions—against the number of new paying subscribers added that year.
- Budget covers residential growth spend.
- Target is 1,250 new customers.
- CAC must stay under $120.
Cost Control Levers
Since waste collection relies on dense routes, high CAC risks profitability, especially with 140% tipping fees. Focus acquisition efforts on zip codes where existing customers allow for route density gains, lowering the effective cost per pickup. You must defintely monitor this closely.
- Prioritize dense service areas.
- Bundle acquisition with new commercial leads.
- Watch out for high onboarding friction.
Action Threshold
If the actual CAC exceeds $120, the business needs to immediately reassess marketing channels or find ways to increase the Lifetime Value (LTV) of those acquired customers to maintain margin viability.
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Frequently Asked Questions
Payroll is the largest predictable monthly expense, totaling $41,000 in 2026, covering 6 FTEs including the CEO, Operations Manager, and three drivers Variable costs like Disposal Fees (140% of revenue) and Fuel (90% of revenue) are also major costs, but payroll is the highest fixed commitment