5. Execute a contract or agreement. Once a prospective service provider is identified, contract negotiations are conducted to finalize the design and financial parameters of the service arrangement. As recycling cooperatives are likely a new model for haulers, some haulers may be more comfortable operating under an informal “hand-shake” agreement rather than a formal legal contract. 6. Establish a price structure. How the cost for the recycling service is structured is critical to the success of the cooperative. It is important to develop a price structure so that small businesses do not bear the burden of paying the highest prices. Three options may be considered:
						I. Time plus materials: This price structure is based on having the value of the collected materials cover the hauler’s costs of collecting and baling the materials. The danger is that it depends on a fairly steady recycling market and fairly highly valued recyclable material.
							Example: If the hauler spends two hours collecting the materials and one hour baling the materials, it will cost the hauler for that time. Then, the hauler will sell the bales of recycled materials. The sale price needs to be equal or more than the hauler’s cost. If this is not the case, businesses will need to pay a fee to cover the hauler’s cost. If the sale price covers more than the collection cost, the cooperative and the hauler could establish an agreement to split the profit.
				In this scenario, the Advisory Committee should ask the hauler:
		The price per hour to collect the materials The estimated time it will take to collect the materials The cost of sorting and baling the materials Any other costs the hauler might incur (providing bins for the participating businesses, etc.) The current market rate for the materials The split ratio for the profit How the businesses will be charged until they meet the break-even point What the maximum cost to the businesses will be if the recycling markets fall
						II. Pickup and rental fees: This price structure is based on the traditional pickup fee plus bin rental fee. Since this option is based on individual businesses, it does not offer the potential for individual businesses to save money by participating in a cooperative. In this case, special services (e.g. a smaller minimum amount of material that needs to be collected per stop) or a discount from the hauler’s regular prices (e.g., all businesses signing up for the cooperative will receive a 10% discount from the hauler’s regular rates) should be negotiated. This method would give credit for services provided in a densely populated area and reward the Advisory Committee for marketing the program.