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how do i add a fuel charge


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Old 01-20-2012, 12:25 PM
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Quote:
Originally Posted by TiedemanLLC View Post
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.
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