A compost facility breaks even when the margin it earns on each ton, from tip fees and product sales minus the cost that rises with every ton, covers the fixed cost of the site for the year. Divide annual fixed cost by margin per ton and you have break-even tonnage; divide that by the capacity your site and permit allow and you have the utilization the business must sustain. The rest of the model is about which inputs you can trust and which ones move the answer most.<\/p>\n
The tip fee (sometimes called the gate fee) is what a hauler, generator or city pays to deliver a ton. It is set less by your own costs than by the alternatives each customer has: the nearest landfill that still accepts the material, a transfer station, another composter, a digester, or land application. Price each material class separately, because the sites permitted to take food waste or biosolids are not the same set that takes clean yard trimmings. Discounts for volume or for long contracts belong in the model as a lower average tip fee, not as a footnote.<\/p>\n
Finished compost, mulch and blended soils earn revenue only on the share you actually sell. Two inputs matter: product yield (how many tons of saleable product come from a ton received, after moisture and mass loss and screening) and sell-through (the share of that product sold rather than stockpiled or given away). Product revenue is the line most often overestimated, so build it from named buyers. Our guide to selling finished compost<\/a> and the list of compost uses in agriculture cover markets and channels.<\/p>\n Some income does not scale with tons: a fixed service fee in a processing agreement, a payment for supplying compost to a city that must buy it, or the margin a hauler keeps on collection because it no longer pays someone else’s gate. In California, SB 1383 requires cities and counties to procure a quantity of recovered organic waste products each year, including compost and mulch, against a target CalRecycle sets from population (CalRecycle procurement<\/a>). That creates public buyers, but the volume and price are whatever you negotiate. See organics processing agreements with cities<\/a>.<\/p>\n Sort every cost into fixed (paid each year whatever the tonnage) or variable (rises with each ton processed). Some lines are semi-fixed: a second loader operator is a step cost that appears at a certain tonnage. Treat steps as fixed within a tonnage band.<\/p>\nContract and other income<\/h3>\n
The cost lines<\/h2>\n