Smart Billing Practices: The Cost of "Free"

by Joe Sostaric

“There is no such thing as a free lunch, son.” My father said this to me when I was a young boy, as I’m sure many other fathers have said (or a variation thereof) to their children. If my father were alive today, I would counter that he did not know the concrete pumping industry, where we give away many things for free all the time! We give away so much stuff that we consider it normal and don’t think twice about it. In addition to giving away free stuff, we often take on risk and exposure that we shouldn’t. Is it any wonder that the concrete pumping industry is plagued by low margins and poor profitability? I will focus on three items that are often given away or discounted significantly on a regular basis.

SUPPLYING SYSTEM

There are pump companies out there that give away for free all or some of the system that they supply. Let’s look at what they are doing when they add system to a concrete pump. Most system supplied is four inches in diameter or less, and most boom pipe is five inches in diameter. When they add system to a concrete pump, they have constricted the flow of concrete coming through the boom. This restriction in the flow makes it more likely that the concrete will plug, which could cause all sorts of bad things to happen.  Here are some of them:

• The concrete could plug and then release on its own, causing the hose to whip and injure a person.
• The operator could increase pump pressures to try and get the concrete to flow. This increased pressure can lead to a clamp breaking or hose bursting, which could cause concrete to spray, damaging cars or structures. The concrete spray can also hit individuals, causing them serious injuries.
• The constriction of the concrete flow can lead to serious problems in placement production targets set by the customer. With volume goals not being met, an argument ensues between the pump company and the ready mixed supplier. The pump company blames the concrete mix, and the ready mixed supplier blames the pump.

In addition to increasing the risk and exposure to pumping concrete, adding system to a pump has additional costs associated with it. First, it is not cheap, as a 10-foot section of four-inch hose can run between $400 and $500, and clamps and gaskets can add another $50 each. If a customer asks for 100 feet of system, this adds up to between $4,500 and $5,500 in system, clamps and gaskets being sent out to their job site. This is not cheap! Also, sometimes this equipment is hauled on the pumps that are not built to be transport vehicles. If the system rolls off the pump, the pump company is responsible for any damages that system may have caused. 

Many pumps also operate on an overweight vehicle permit. The extra weight associated with carrying system is not accounted for, which could cause the pump to exceed its permitted weight. The system also wears out, requiring replacement, and then it mysteriously disappears. Pump companies leave it on job sites and throw away the hoses that get damaged. Where this stuff goes is the question; as a result, pump companies never have as much as is needed, causing more orders. Setting up, breaking down, priming out and cleaning out system take time and effort. Furthermore, system can be awkward to handle and can cause injury if handled improperly or if the operator steps in a hole while carrying system, which can cause a worker’s comp claim. Lastly, pump companies will need to inspect it. After an accident with a burst hose, I know of a company that was asked by the OSHA inspector for documentation that the hose was inspected before it was sent to the job site.

The point I’m making is that system is not free. It not only is expensive to buy, but the possibility of an accident or an injury is greater when using system as opposed to just pumping with “a boom and a hose.” Look back on issues you have had in the past and ask yourself how often system played a role in the problem. If you tracked issues and found that half of the jobs where there were problems had system, but only 20 percent of the total jobs done had system, I would not be surprised.

When supplying system to jobs, there are multiple tasks that must be completed, including loading it onto a vehicle, transporting, setting up on a job site, priming through it, breaking it down, cleaning it out, loading it back on the vehicle, transporting it back, inspecting it for wear, unloading it, and storing and accounting for it. Should all these tasks be done for free? Furthermore, operators have been known to not clean out system properly before returning it to the yard, which leads to problems for the next operator using the system. I cannot tell you how many times this has happened, and no one has ever admitted that they were responsible for not cleaning out the system properly before returning it to stock.

ADDITIONAL PAPERWORK PREPARATION

System is not the only thing that is sometimes given away. Jobs that require a certified payroll or prevailing wage require additional back office tasks. When a pump company does a job that has a certified payroll or prevailing wage requirement, there are additional steps that must be done. Instead of just sending an invoice to the customer and getting paid, pump companies must complete documents that prove they comply with project regulations. They must often pay their operators at a higher scale and account for work done on prevailing wage jobs separately.

The paperwork submittals alone can cause issues. For public agency jobs, your customers are often responsible for not only submitting their own payroll, but for making sure that all subcontractors and suppliers are submitting their certified payroll reports on time and correctly. If there are problems with any part of the submittal, it can hold up payment to your customers, which in turn holds up payment to all parties. Jobs with certified payrolls are more likely to have delays in receiving payment. It is not uncommon for a high percentage of past-due customer balances to have an issue with certified payroll or prevailing wage documentation. This causes additional stress that can damage a relationship with a customer and impact the cash flow of your business, as you may need to tap into lines of credit unnecessarily to cover a shortfall in collections.

Doing certified payroll and prevailing wage work requires extra diligence and resources. Before you quote a job, know beforehand if there is a prevailing wage or certified payroll, and make sure you get paid for the extra work you can expect to do. Better yet, include a charge for prevailing wage–certified payroll jobs in your terms and conditions, together with an additional fee if you must resubmit your payroll because your customer failed to tell you the job had that requirement prior to doing work on the job.

NOT CHARGING FOR ALL OF AN OPERATOR’S TIME OR EXPENSES

The last item I want to discuss which is often given away is our operators’ time. Operators are the lifeblood of a pump company’s operation. They are trained professionals that play pivotal roles in the success of concrete placements. Without them doing their jobs well, the entire pour can be jeopardized. Too often, however, we cheapen their contribution by giving away part of their time for free. Examples are 1) charging for only the onsite time; 2) charging for only one-way travel; and 3) charging for reduced hours, such as only charging for one hour of travel each way when it takes two. When quoting large housing tract pump jobs, the homebuilders often ask for fixed rate pricing. They want more certainty on what it will cost them to build a house, and they get this from the other trades. When quoting this work, the problem most pumpers have is they quote the work on the amount of time it will “typically” take to do the job. But the problem with this approach is that it will almost never take you less time than what is “typical” — but can easily take you much more time than expected for problems you have no control over. The common problems are:

• Traffic. As I write this on May 18, 2025, abandoned mines under I-80 in upstate New Jersey have shut down the freeway since December 2024, causing gridlock on detours throughout the area. The problem is not projected to be fixed until late June 2025.
• Ready mixed supply. If service is poor, if there is a problem with the mix or if a foreign object from the batch plant plugs the pump, concrete pours can be extended for hours.
• Place and finish production. If the place and finish crew is understaffed, if the foreman instructs the operator to slow down the pump due to formwork failure. or if the crew is looking for additional hours because of rain earlier in the week, the duration of slab placement will be extended.

None of these issues are under the control of the pump company, but all of them can impact the profitability of doing work. When you quote fixed rates with no ability to get paid for issues that were not of your doing, your profitability is in the hands of others.

In Texas, there has been a change in hours of service as pump companies’ exemption from the rules has been eliminated. This means that pump companies will need to take additional steps to remain in compliance with the law by double-shifting operators, relieving operators who run out of hours, and getting hotels and meals for operators that cannot make it back to the yard within the allotted time. All these scenarios will increase the costs associated with pumping jobs.

PLAYING A ROLE IN DEFINING THE MARKET

The excuse I often hear from pump companies when not getting paid for all hours and costs is “That is the market — here we can’t get paid for all our time.” When you say things like this, you are forgetting that you are part of that market; therefore, you play a role in defining how the market is perceived.  The customers you are working for often contract with other equipment suppliers, like crane and backhoe companies. I don’t know of a single crane company that doesn’t charge portal-to-portal, and the backhoe companies I am familiar with all charge an eight-hour minimum for their services. If the same customers consistently pay for all hours from crane and backhoe companies, why do they expect to pay for fewer hours from pump companies?

If you want to know why, look in the mirror.  Nobody wants to pay for more than they believe they should. As a consumer, when I go to buy a car, I will push for a lower price even when I think the vehicle is priced fairly. I ask for a discount because I have gotten it in the past. Your customers only ask for reduced rates because they have been granted them in the past and have come to expect them.

THE CONSEQUENCES OF WORKING FOR FREE

Doing things for free will cause you to go broke. Once you have established with your customers that you are willing to give things away, you will need to work hard to break that pattern. You must have conversations with your customers that explain and justify why you cannot afford to continue profit-sucking practices, and you might need to slowly transition away. For example, if you are in a market where one-way travel is all that is charged and your average travel time (one way) is one-and-a-half hours, the average pump tag will increase by $300 for two-way travel if you charge $200 per hour for the pump. This is a big jump, and you will need a strategy to increase the average ticket charges more steadily. What can you do to get paid for more hours? Suggestions might include charging portal-to-portal, but offering a temporarily discounted travel rate, or increasing pump minimum-hour charges. The goal is to get your customers to accept the fact that they will be charged for all hours that the operator works and for all system that is supplied.

You must also assume that your competitors who have the exact same problem will not decide to change their practices at the same time you do. As I said in a previous article, American Airlines stood out on an island when they decided to start charging customers for checked luggage. It took a while, but every airline (including Southwest) eventually followed suit. Baggage fees are now a very big part of the revenue generated by airlines, and it wouldn’t have happened unless someone was willing to take the lead. No pump company out there has a magic way of doing business that gives them a huge competitive advantage, which means they all face the same challenges created by giving stuff away for free. Someone will have to take the lead. Why shouldn’t it be you?

As the old joke goes, a farmer takes his watermelons to market and gets $1.00 each, but they cost him $1.10. When asked how he plans on making a profit, his comment is, “Easy, I’ll get myself a bigger watermelon truck.” More pumps and more equipment will not help if you do things for free that cost you money. It is important to work on the fundamentals of your business, and getting paid appropriately for all that you do is a great place to start.  For comments, email Joe Sostaric at joes[at]toughcommerce[dot]com.