Short-load Concrete Pricing – Prepare for high profits
Cart-Away and U-cart business owners know that there are huge profits in selling concrete in a trailer. Setting your pricing correctly will ensure that you have a very quick return on your investment.
Short-load fee calculations
We always suggest that you do a survey of the local ready-mix providers as you set pricing. Sometimes the truck delivery companies will have a minimum load amount before they will even come out for a small project. It is not uncommon to hear of a 3-yard minimum to deliver with a truck.
Here is how we run the calculations:
Company 3000PSI price Short-load fee Minimum to deliver
XYZ Ready-mix $155 a yard $135
Local Ready-mix $125 a yard $250 3-yards
Big R Ready-mix $145 a yard $125
AVERAGES $141 a yard $170.00
Calculations – 1-yard concrete purchase:
· Average short-load fee for your area = $170.00
· Truck costs to get 1-yard of concrete is $141 + $170.00 = $311.00
As a rough estimate as to your 1-yard pricing, we use between 50% and 60% of the calculated average short-load fee in your area. $311 X 57% = $177.00 a yard.
From these numbers, we would suggest that you price your 1-yard at $177.00 retail.
Your Material Costs
Next you will want to calculate your cost of making a yard of concrete. This will require shopping for sand and stone delivered to your site. You might need to convert the prices that you are given from a price per ton to a price per yard. You can ask your vendors to assist you with that calculation. Next you will need to find a vendor for your powdered cement. This product will be delivered to you in bulk or in a bag. Next you will want to add a little to each yard for the cost to pay for the water, maintenance and power to run your material loading system.
We help hundreds of locations do this pricing research every year. We are happy to assist you through this process for your market. For Example: The 2020 average for ready-mix raw material cost, with adders, is $74.65 per yard. You may be a bit higher or lower depending upon where you are in relation to the quarries.
Very High Profit Margin
In our example you will make a yard of concrete for $74.65 and sell it for $177.00 per yard. $177.00 – $74.65 = $102.35 profit from each yard.
Truck Ready-mix – Shrinking Profits
Other types of ready-mix businesses must cover the cost for expensive trucks, fuels, regulations, and the high wages of delivery drivers. Transit-mix trucking companies are forced to move very large volumes of concrete to pay the bills and put any money in the bank. While the Cart-Away business model profits are up for 2020, truck delivery profits are way down because of their many exploding costs.
Here is a quote from the National Ready Mixed Concrete Association’s 2019 report: “Industry profits per yard tumbled by 13% in 2017 followed by a more precipitous 20% collapse in 2018; indications based on preliminary partial year results are that profits continued to decrease in 2019”.
Build a Profit-driven Price Sheet
Unlike truck delivery, your Cart-Away customers will cover the cost of delivery, saving you expenses and building your profits. Your pricing should be structured toward profit. The real magic of the Cart-Away business model is that BIG profits come in “less-than-one-yard” sales.
We suggest that you build your price sheet so that you always make the same base amount of money with every load. You have almost all of the same labor and overhead costs no matter if you are selling 1-yard or a ¼ -yard in the trailer. You should have a base amount of money in your pricing every time a trailer leaves your location and then build additional profits on top of that base.
Break it Down by Cost of Materials
Once you have a good number for your cost of materials (example $74.65, so let’s call it $75 to make it easier) and a feel for your selling price (example $177), you have your base profit number. In this case it’s $102.00. Now you can build your portions-of-a-yard pricing using this base. Doing a bit of math, you can divide your materials cost into quarters.
Single Trailer-load Pricing Example (NOTE: Use a Cart-Away 1 3/4 – yard trailer for larger loads)
1-yard is $75 (cost of materials) + $102.00 (base) = $177.00 per yard retail
¾ – yard is $75 X .75 = $56.25 + $102.00 = $158.25 (round to $158.00 per 3/4 yard)
½ – yard is $75 X .50 = $37.50 + $102.00 = $138.50 (round to $139.00 per 1/2 yard)
¼ – yard is $75 X .25 = $18.75 + $102.00 = $120.75 (round to $121.00 per 1/4 yard)
1 ¼ – yard is $75 + $18.75 = $93.75 + $102.00 = $195.75 ($196.00 per 1 1/4 yard)
1 ½ – yard is $75 + $37.50 = $112.50 + $102.00 = $214.50 ($215.00 per 1 1/2 yard)
1 ¾ – yard is $75 + $56.25 = $131.25 + $102.00 = $233.25 ($233.00 per 1 3/4 yard)
Retail Profit Margins
It is really hard to calculate the percentage of your sales that will come from 1- yard or those that will come from just ¼ yard in the trailer.
If you sold more ¼ yard loads your percentage of profit would average higher because you would be selling a load at $121.00 that only cost you $18.75.
If you price for profit it will not matter what your mix of trailer loads turns out to be, because you will always be priced for the best profit scenario possible.