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Price Per Pound
By
Richard Wolfe


There is much discussion and controversy about the system for billing heavy-duty truck accidents and recovery's, called "Price Per Pound".
Ask 10 people about it, and you will get 10 different answers. I know there are 2 vastly different camps on this subject, but it seems to be mainly over 1 system. But for a start lets look at the original system, created by Stormin Norman Horton, in Ozark Alabama.
He was trying to make a simple system for billing the costs of accidents, which was fair to the customer. Now why would we want to be fair and who is the customer is the key question here.

Our customer is the Insurance company via the Trucking company. After all it is not the police department who called you because the truck is overturned along side the highway. This is one thing which we have to remember. After all we are working for the customer, the person (s) with the badges and guns are there to protect the motoring public, and to get the traffic moving again in the quickest possible method. They may of originated the call but they are not the customer. Follow this reasoning ?


I know that there have been many articles done concerning Price Per Pound, but I am going to join the ranks of authors concerning the subject. I am going to do one now and also am working on a training manual concerning the subject. I will also be starting to present seminars on the subject during the next year.

But on to the basics of Price Per Pound. It was designed to cover heavy duty truck rollovers / accidents in which the industries progression into modern hydraulic recovery units and air cushion recovery systems made it where we were working smarter and not taking as long to do the recoveries, hereby cutting our bills by being more efficient. This is where we were going wrong in Stormin's mind. So he created this system after much thought and discussion with other industry leaders.


Now as to how it works, that is where we will get into the crust of the pie. It is set up with a few variables that you add in, to allow for you to give an accurate price while on scene of the incident. The rate sheets allow you to price out the job, and give a price because you are always asked what you are going to charge to do the job. Hard to tell them if you are billing by the piece of equipment and by the hour for each one.
Sounds like a great plan. But as simple as it is some people have made if complicated. It was designed to be very simple, and allow you to price out recoveries when you get the call, or arrive on scene or back at the yard. This was designed for ROLLED OVER TRACTOR TRAILERS.
The application of it for jackknifes, nose downs and winch outs are where we run into complications and fights over the use of it.
Ok so you got a rolled over semi truck. How do you use the billing method. It is not something that is just pulled out of the air. You have to do some research on it, and that also involves knowing what your cost of doing business is. You have to know your prices for doing a job.
That way you can select a price to use for the figures that the Price Per Pound formula uses. Now the rates that are listed in the charts are what we use. Things are different all over, but remember get the numbers to high and you will get into problems with collecting with out fights.
The rates are not set in stone, they are movable in price. You can have different Price Per Pound Figures for a company in Los Angeles, Lockport New York, Andover New Jersey, Niota Tennessee, and even little old Ozark Alabama. After all costs of doing business are different in each place do to wages, insurance costs, equipment expenses and other factors.

OK, under Price Per Pound you have 2 different rate charts. One for recoveries with out Air Cushions, and one with them. Now if you are a company that does not have Air Cushions, you might still contract out for the use of them. You can still charge for them if you USE THEM. But remember you have to use the chart for them to obtain the proper charges. The mixing of hourly and Price Per Pound does not work. BUT if you have to subcontract out for equipment or supplies that is able to be added to the bill.
Do not get greedy here and charge for them as an subcontracted item and then also use the Air Cushion charge chart. That will raise a lot of red flags and start to get people looking at your bills closely.
OK here are some of the Price Per Pound charts which we used at Stormin's, and they are the March 2002 version.
Lets start with the first one.
Normal Tractor/Trailer recovery on or near Highway:
Air Cushion Recovery.

Here you have your major fixed variables such as;

3.4 Cents per Pound ( CPP ) For normal recovery. Now here is where you have a typical daytime job. Now this pricing is low, as it is where we are used to contract our Air cushion recovery system to other in the area. That way they can still manage to charge rates to make money for their services.

3.8 Cents Per Pound ( CPP ) This is where the inclement weather comes into to play. Now defining inclement weather is one that is particular to certain areas. In Alaska, where -20 is normal lots of the time it might not be charged, but if it was that down here in lower Alabama we would think someplace froze over and charge the rate for that here. But also when it gets above 90 here we run into lots of heat related problems with personnel on the scene. Likewise if you are working in torrential downpours you might be charging it. Or even in high wind situations. (try rolling over a trailer when the wind is blowing 60+ MPH against you) or in blizzards.

3.9 Cents Per Pound (CPP) Here you are back to normal recoveries, but the job is being done at nights or on weekends and holidays. Typical times where overtime is being paid to personnel. I know most companies pay commission but some do use hourly wages when doing heavy duty recoveries. This rate is not quite time and a half but it does help out in defraying expenses.

4.6 Cents Per Pound (CPP) Nights, weekends, holidays, inclement weather rates here. Now here is where the combination of all the factors come to play for the use of the air cushion recovery system and 2 operators for it. This and the above rates are for services rendered in our "trade area" which we call within 50 miles of the office.




6.0 Cents Per Pound ( CPP) Now this rate is for if we handle the complete recovery of the accident / incident with all of our equipment including tow trucks and air cushion system. This is in addition to the normal base rates charged. This rate includes all equipment needed (not subbed out or rented out for the job) and includes getting it to the yard or loading dock within the 50 mile trade area.


In this rate we also have a $ 200.00 an hour standby time for use when it is warranted. Now if you arrive as requested by the company or public safety agency, and then get told you have to wait for some strange reason, offload of Haz Mat, power company, investigations this is where you are able to charge for the equipment and personnel being tied up. We usually start charging after the first hour if we are requested to standby by the customer or public service agency.








Now on to the next area, wrecker (tow truck) recovery only, no air bags.
This rate was built for jobs where Air Cushions are not used, and does include recovery of wrecked or overturned tractor / trailer to include recovery equipment, manpower, including off loading if necessary. It does not include the tractor/ trailer to off load onto, or delivery of cargo, but does include delivery of wrecked equipment to a loading dock or impound yard within a 50 mile radius.

Here are your major variables for this kind of job. (choose one)
The categories are the same as above for the reasons on the different rates and times


7.8 Cents Per Pound (CPP ) Normal Recovery, days not holidays, not inclement weather.

8.3 Cents Per Pound (CPP ) Inclement Weather, again where it is not real great weather. Snow, blizzards, high temperatures, floods, and the like.

9.1 Cents Per Pound (CPP) Nights, Weekends, Holidays. Again times where you are not on regular business hours such as Monday - Friday 8 am - 5 PM.

9.4 Cents Per Pound (CPP) Nights, Weekends, Holidays, and inclement weather. You know the type for this one, Saturday morning 3 am, New Years day in a blizzard.



Now on to the Additional Variables that are used for BOTH Wrecker Recovery and Air Cushion Recovery Notice all of these are in TENTHS of a Cent here. Not CENTS. It can cause confusion if not understood and carefully marked down on the invoices. This is where lots of the problems using Price Per Pound come into play.


0.3 Cents Per Pound (CPP) Additional for calls 51 to 100 miles from your main terminal / office. This is to cover the additional expenses for long distance requests for service. We try not to discourage these jobs but in fact they can be rather profitable.

0.8 Cents Per Pound (CPP) Additional for wheels higher than the roof of the trailer, or tractor / trailer down a bank or incline. The reasoning for this is that it takes extra effort, equipment to over come the initial lifting requirements to obtain a position where you begin to actually recover the vehicle beyond say the 90 Degree mark. Why not get paid for the extra effort.

0.9 Cents Per Pound (CPP) Additional for back doors of trailer open or tractor pulled out from under trailer. If the doors are open you have lost most of the structural strength and integrity of the trailer. This is specially true with the trend to light weight flat plate dry vans such as the Wabash Maxi Vans. Also if the tractor has been pulled out from under the trailer then you also have to consider the trailer landing gear legs during the recovery. You might need to hook a converter dolly up to prevent the legs from going though the flooring.

1.5 Cents Per Pound (CPP) Additional for top of trailer severely buckled or roof blown out of the trailer. Here again is where the light weight trailer are the reasons for major extra work in strapping, cribbing, bracing and such. Fiberglass roofs just do not have any strength and if you think the cross bars will hold it together you are mistaken.


3.0 Cents Per Pound (CPP) Additional for secondary handling of the cargo, Now this is where the work comes in when the trucking or insurance company wants the product reloaded, sorted, inspected for damage or restacked after the accident has happened. You will most likely be at the yard and have to get another trailer to transload the freight into. This is where you are doing secondary work on the load. You can also use this rate for load shifts where you have to physically get in and do labor on the product. This also does not include any costs for tractor/ trailers needed or any loading docks ,forklifts, or warehouse fees needed to perform the job.


Now on to the key one in pricing , the 1 % of declared salvage value of the cargo. It is amazing that the trucking company or insurance company will tell you when you are doing the job that the cargo is worth $ XXX amount of dollars. Heck, if they are doing that and telling me I am responsible for that value then if the load is recovered intact with little or no cargo loss then we have saved them how much in the claims for damage. Can we not charge extra for this. Consider it a bonus to a job well done, but remember it can also be one where you might get stuck defending your rates. You can also use it for a area where you can offer quick pay discounts.
You will also see where you explain it to the customer, and see that the quoted $200,000 load of redwood becomes worth $20,000. It is common for salvage value to change before the job is started when this is explained.









Now onto to the Price Per Pound Gross Vehicle weight minimums that make this system work.

60,000 Pounds Tractor and trailer combination or trailer only loaded, or shipping container unit.

30,000 Pounds Bus - Straight truck, this is for the U Haul type trucks or the expeditor ( hot shot ) units that are out there.

16,000 Pounds Mobile homes, you know those shaky shacks that are also called modular homes. They get turned over in high winds and such. These are usually in pieces when you get there. Plus they also create more problems.

16,000 Pounds Motor homes. Travel trailers, with assorted tow vehicles.

Heavy Equipment, Ie. Dozers, Cranes, Excavators etc are priced on different basis do to weights and complexity of recoveries.


Airplanes and other Aircraft are prices on an individual basis.


****HAZARDOUS MATERIALS CARGO SURCHARGE****

This surcharge applies to the total bill ( if applicable ) Does not apply to unit fuel. Does not include clean up or clean up costs or disposal costs.


50 % Flammable High Flash Point

100% Flammable Low Flash Point

200% For class B explosives or chemicals

300% For Class A Explosives or chemicals with leakage from cargo containers / tanks.

500% For Radioactive or Nuclear cargo loads.


With these surcharges any and all expendable materials will be billed out to the Haz Mat job on a replacement cost basis. This includes Haz Mat suits, protective clothing, Air Cushions damaged or contaminated, Breathing Apparatus, Boots, gloves, and other Personal protective clothing. Equipment decontamination costs will be included in this area, along with replacement of straps, chains, wire rope and other materials / equipment which comes in contact with chemicals which will damage, or destroy the equipment.

This surcharge also covers the cost / risk while doing the job, you as a company have to provide coverage (IE. Workers comp insurance) for the employees, and therefore should be able to recoup some of the risks / costs on jobs where the risk factor is extremely increased.

NOTE: This surcharge is also to cover the risk and exposure to your personnel involved with this kind of work. This surcharge also helps show the customer a benefit or value in their mind as to what they are buying with this surcharge. Possible future liability to the tow company employees is covered here also. This one is where you need to check with you insurance carriers and lawyers to determine the legal aspects of this for the liability risks to company personnel.

OTHER CHARGES / RATES


Piece Rate ( small jobs) Large bags, $ 173.67 per bag per hour. Two (2) hour minimum

Mat Jacks, $ 86.78 per hour, One (1) hour
Minimum.



Specialized Recovery Air Cushion Recovery unit, and all bags $ 911.77 per hour. Two (2) hour minimum.

Nights / weekends/ Holidays $ 144.29 additional per hour.

2.5 Cents Per Pound (CPP) 20,000 pound Minimum
This is for load shifts where you are working on straightening out cargo in box trailers or on a flatbed.

These charges are a back door for where the oddball recovery job that would take to long to be profitable by flat rating the job.


Important notice here on all of the rates used and applied. They are not cut in stone, you can adapt them to your particular operation / business. But they are given as a guide line to better inform you the operator of what the charges are and how to apply them.

Also remember that Price Per Pound billing does not cover costs for specialized equipment, resources, or personnel. Examples of pass on billing include, Cranes, Garbage trucks - dumpsters, disposal fees, Divers, Hazardous Materials clean up costs, supplies, personnel, forklifts, loaders, or extra manpower for cargo reloading.
It is designed to cover the costs of one operator / driver of the recovery vehicle (s) needed, one operator of air cushion recovery system and the vehicle to get it there if not self contained, and one supervisor on scene.