PDA

View Full Version : how do i add a fuel charge


strength
01-19-2012, 06:43 AM
how do i add a fuel charge to my weekly and bi weekly grasscuting accounts there is word that gas might hit a all time high of $5 a gal this summer and i don't want to bid the cuts high and gas not go up so I'm going to put in my contract a fuel charge over x per gal so at the end of the month when i invoice i can add the charge but i need help as to how much thax

dpld
01-19-2012, 07:47 AM
you will just have to set a base line of what would be considered normal pricing and then come up with a average of the gals used for each customer and hit them up the difference.

even though nothing in this day and age would suprise me anymore and it is not only believable as well as likely that fuel prices will increase i also found history has proven that during a election year the prices will stay within reason to what we are used to.

Steve
01-19-2012, 03:38 PM
and hit them up the difference.

Do you mean if prices go higher than you expected, to charge a fuel surcharge on invoices or what would you suggest?

dpld
01-19-2012, 04:47 PM
Do you mean if prices go higher than you expected, to charge a fuel surcharge on invoices or what would you suggest?

the way i see it the only fair way if it is in fact a fuel charge would be to set your prices for your services around the baseline average of say $3.00 per gal and then calculate what you use on each property each time as well as what you guess on driving to the job.
i only include one way on the travel, it only includes the mileage getting to the job because the next customer pays for the trip from there to their house.

then if the average price of fuel for the month was $3.75 per gallon and you use 2 gals per week they would pay the $.75 per gallon extra per week.

it is the only fair way i can come up with because i don't think it would be fair to profit off of it when it is supposed to be a charge to offset the additional costs.
if you inform them and they see the prices went up at the pump and it only reflects a couple bucks a week on their service they won't care too much.

our nursery does that to profit, they charge a 10% fuel charge to your total order.
the problem is a fully loaded tractor trailer of new nursery stock will usually average $60,000 retail and 10% is $6,000 and any load coming in might have a extra $500.00 charge for them tops so where they get off tacking that kind of money on i'll never know, but it has cost them a lot of customers.

TiedemanLLC
01-19-2012, 06:06 PM
I am personally not a fan of fuel surcharges. We tried it once years ago, and we hated, so did our clients. I have since personally believe that you should just figure a higher fuel cost into your bidding.

Sprinkler Buddy
01-19-2012, 09:01 PM
I am personally not a fan of fuel surcharges. We tried it once years ago, and we hated, so did our clients. I have since personally believe that you should just figure a higher fuel cost into your bidding.

I agree, it's a good way to lose a customer over a few dollars.

ringahding1
01-19-2012, 11:00 PM
You could in your spring mailings prepare customers for a fuel surcharge. If the price goes over $4/gallon add $1/week. $4.50 add $2 etc.
Or just add a percentage to their invoice and not say anything. I did this way 2 years ago and was yelled at by a customer...she said 5% was NOT enough.

I did not lose any customers over this, and we actually ended up raising rates for the first time the next season(last year)
Example: $30 per week lawns~~~$32.50


Hope that helps..

strength
01-20-2012, 05:37 AM
i do under stand where you all stand is hard with fual in 2010 it was $250 a gal in 2011 $350 a gal 2012 might be $550 a gal on a 32 gal tank i went from $80 -$112 in a year and might go to $176 and lets not forget my z takes 10Gal -$35 could be $55 thats $231 for truck and Z

dpld
01-20-2012, 08:02 AM
I am personally not a fan of fuel surcharges. We tried it once years ago, and we hated, so did our clients. I have since personally believe that you should just figure a higher fuel cost into your bidding.

there is nothing wrong with it as long as it is fair and not being abused as another way to make a buck.
also, by having a baseline fuel price in your rate it allows you to keep your price more competitive and not risk pricing yourself out of a job as well as it leaves you a saftey net in the event the fuel gets out of hand.

i myself do not have a fuel surcharge and never charged one but i do have a provision in my contract for that if the price of fuel were to exceed a dollar per gallon or more from when the contract was written that the difference would be charged.

what if the price of fuel was low and there were no signs of fuel prices becoming unstable when you bid the job, how would you be able to "figure" that in? would'nt that be worse then a fuel surcharge?
just overcharge someone for something that may or may not happen.

like i said the purpose of it is to allow you to keep your prices fair to you clients but at the same time allow you to have a saftey net when the crap hits the fan.

everything everywhere goes up when fuel prices rise from soup to nuts what makes the landscaper any different.

TiedemanLLC
01-20-2012, 11:31 AM
there is nothing wrong with it as long as it is fair and not being abused as another way to make a buck.
also, by having a baseline fuel price in your rate it allows you to keep your price more competitive and not risk pricing yourself out of a job as well as it leaves you a saftey net in the event the fuel gets out of hand.

i myself do not have a fuel surcharge and never charged one but i do have a provision in my contract for that if the price of fuel were to exceed a dollar per gallon or more from when the contract was written that the difference would be charged.

what if the price of fuel was low and there were no signs of fuel prices becoming unstable when you bid the job, how would you be able to "figure" that in? would'nt that be worse then a fuel surcharge?
just overcharge someone for something that may or may not happen.

like i said the purpose of it is to allow you to keep your prices fair to you clients but at the same time allow you to have a saftey net when the crap hits the fan.

everything everywhere goes up when fuel prices rise from soup to nuts what makes the landscaper any different.

Don't get me wrong, if you want to add in a fuel surcharge that is fine, but for me it's not. I have come up with some other problems with fuel charges, in which one of them you actually stated "what if the price of fuel was low"

1) What if you put a fuel surchage in your contract to go above a certain price. Would you lower your price then if a customer comes to you and says "hey, you have a fuel surcharge in your contract, but since fuel prices have been low lately, shouldn't you lower my price then?" The fair thing is to lower their price then because they have a valid argument. The argument is that if you are going to raise prices for higher fuel prices, then you need to lower their price with lower fuel prices.

2) What average are you going to use for the fuel surcharge? The national average, state average, local average? What happens if you fill up your gas in the morining and it's above the fuel surcharge price, but then in the afternoon the price lowers? How will you explain that to your client? What if the gas station you fill up is more expensive than the gas station across the road? There are way too many variables involved when trying to say when the fuel surcharge will take effect and how long it should be in effect for.

That's why it's easier just to built the price in your bids. When it comes around for contract renewal, if the gas prices are higher, then you know you need to raise the prices.

dpld
01-20-2012, 12:25 PM
Don't get me wrong, if you want to add in a fuel surcharge that is fine, but for me it's not. I have come up with some other problems with fuel charges, in which one of them you actually stated "what if the price of fuel was low"

1) What if you put a fuel surchage in your contract to go above a certain price. Would you lower your price then if a customer comes to you and says "hey, you have a fuel surcharge in your contract, but since fuel prices have been low lately, shouldn't you lower my price then?" The fair thing is to lower their price then because they have a valid argument. The argument is that if you are going to raise prices for higher fuel prices, then you need to lower their price with lower fuel prices.

2) What average are you going to use for the fuel surcharge? The national average, state average, local average? What happens if you fill up your gas in the morining and it's above the fuel surcharge price, but then in the afternoon the price lowers? How will you explain that to your client? What if the gas station you fill up is more expensive than the gas station across the road? There are way too many variables involved when trying to say when the fuel surcharge will take effect and how long it should be in effect for.

That's why it's easier just to built the price in your bids. When it comes around for contract renewal, if the gas prices are higher, then you know you need to raise the prices.

the fuel charge would only even come into play if there were a drastic price increase.

i am not saying nor would i play it like the stock market and have daily rate changes there is no need to make a mountain out of a mole hill and create another job within your business watching the stock ticker.
it's in place for extreme circumstances and like i said i have never charged a fuel surcharge but it is there for extreme circumstances.
if fuel were to go up a dollar a gallon or more i think that would put a big hit on any company, i myself average about 350 gallons a week and if it were a long term thing like the entire season that would add up to over $10,000 bucks a year for me.
how could i just eat that if it came down to that?

it is all part of doing business but all costs for doing business should always be reflected in your fees.

plus averages would be the normal price range in fuel for your area and it would not be narrowed down to the penny.
being in business your prices allready take that into consideration and it is based more on a range of prices then any one number.
for example, where i live right now it is 3.25 for reg unleaded and under normal conditions it varies between 2.89 to 3.65 depending on the time of year so my rough baseline would be the high and low price.

plus a fuel charge has to be a seperate line item on you invoice so if there is a need to charge one it is there all by itself and when it is not needed there is no charge.
if someone where to just hand a customer a bill for 50.00 bucks saying it is for the service and fuel charge the customer would a little suspicious and make that person look like a fool that deserves such scrutiny.

obviously anything less is more money in your pocket if the prices were to fall but when it starts to climb up to say 4.00 a gal you need to at least take notice and crunch your numbers to see if it is hitting your bottom line too much and if so you need to have that option.

high fuel prices hit us in many ways and it is not just at the pump.
petroleum based products like certain pesticides and fertilizers go up and i even get slammed at the nursery buying materials for jobs when the price rises.

i am not much of one to nickle and dime people, but i am in business to make money and when something is hitting me hard in the pocket corrections have to be made. you need to at least have these provisions in your contract to protect yourself because agreeing to a price with a customer for a contract is not a "it's this much no matter what agreement "and in the event of dire circumstances and abnormal conditions you need to have the freedom to do what you got to do within reason.
and even if you never have to implement a fuel charge, you at least have it up front and out in the open from the get go.