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How to charge a fuel surcharge


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Old 07-10-2008, 06:18 AM
vl2007
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Default How to charge a fuel surcharge

Fuel is part of opperating expenses, and with fuel price going up, I need to apply a surcharge. If i apply a 1% fee to clients bill, based on thier monthly bill, the 1% will cover my fuel increase. Just need to know what everyone else is doing, and how do you handle it on your tax's? It's not income.
tx vl2007
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  #2  
Old 07-10-2008, 12:59 PM
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Default Lawn Care Fuel Surcharge

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Originally Posted by vl2007 View Post
Fuel is part of opperating expenses, and with fuel price going up, I need to apply a surcharge. If i apply a 1% fee to clients bill, based on thier monthly bill, the 1% will cover my fuel increase. Just need to know what everyone else is doing, and how do you handle it on your tax's? It's not income.
tx vl2007
To handle your tax question first: A surcharge is simply a temporary increase in the amount billed to the customer. It is probably still considered income and it is offset on your taxes by your fuel costs. It doesn't matter if lawn mower fuel is $1.00/gallon or $4.00/gallon, it is still expensed against your income and the surcharge is included in your income calculations. As far as fuel for your vehicle, you are allowed to take a milage expense on your taxes which has been adjusted upward in recent years. This is my opinion, so, check with your CPA.

I wonder if you will be well served with a 1% surcharge. On a $30 lawn, 1% = $0.30. If you have 100 weekly customers, you will make an additional $30 per week. If you lose even one weekly customer out of 100, you will be losing $30/week in revenue...practically a complete offset.

Is it really worth all the hassle for 30 cents per customer?

What about a different approach? On your next billing cycle, send a note explaining your costs for fuel. Instead of raising your prices, explain that you want to offer additional services to them to help you offset fuel costs.

If you don't already offer edging, included it as an additional service. For a few extra minutes work you can add $10 to each bill. I bet your customers will be thrilled to help you this way instead of being annoyed at an "additional fuel charge" they are required to pay.

Edging is just one of dozens of extra services. What other services can you offer?

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Old 07-10-2008, 02:48 PM
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Hey Keith, that is a great idea. I have been tossing around the fuel issue for a while, and at a loss as for what to do. I will think about this idea of yours, and see if I can make it work.
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Old 07-11-2008, 04:59 AM
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Keith,

I gave this post 5 stars. Remember you can rate posts too!

Great post. I have yet to see any posts in the past with that view point. It's mostly, raise your rates. Even if someone leaves, who cares. Just raise your rates and fill your empty spots with new customers.

I'd love to hear what vl2007 decides to do. Keep us posted.

Brandon, I'd like to hear what you finally decide to do as well.
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Old 07-11-2008, 10:52 PM
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My customers just give me a few extra dollars, because they know that prices are killing me. We have diesels, and fuel cost is about $5.09/gal. $4.26 for regular.

I was going to add a $10-$15/month charge, but now I may just write a letter explaining our reasons, and asking for additional work while we are there.
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Old 07-12-2008, 04:20 AM
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Quote:
I was going to add a $10-$15/month charge, but now I may just write a letter explaining our reasons, and asking for additional work while we are there.
I'd love to see what kind of letter you create!
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