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Fuel Price Increase

Discussion in 'Commercial Snow Removal' started by ADLAWNCUTTERS, Aug 25, 2004.

  1. ADLAWNCUTTERS

    ADLAWNCUTTERS Senior Member
    Messages: 212

    Hi Gang With The Fuel Prices So High And I Think They Will Go Up Even More. Do You Think A 15% Increase Will Be Enough. How Much Are You Going To Raise Your Prices This Season. Thanks For You Advice.
     
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I've already informed my customers that there would be NO increase this year. People are sick of hearing about increases in prices blamed on price increase of gasoline. I have a stategy that will allow me not to lose money AND be in good graces with my existing customers.

    Do you mean a 15% increase in your prices? That means a $50 driveway would go to $57.50. Are you really using $7.50 MORE gas to plow that driveway than you did last year? Even including the driving between accounts?

    I figure fuel expense for my whole route at 5% of route income . So for a $50 driveway, I'm figuring $2.50 for fuel (diesel). That includes the drive from the last account. Actually, I just look at the amount used for the whole route (fillup to fillup). If I'm using substantially more, then I'll look at individual accounts to figure where it's going (maybe it was actually that sidetrip back to the house for coffee).
     
    Last edited: Aug 25, 2004
  3. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    For some reason, my first reply isn't showing as a "Reply". This is just a test to see if it shows up.
     
  4. rainair

    rainair Senior Member
    Messages: 153

    I put in my contract, a "gas price spike" clause... at any such time the price of gas tops over the $2.00 a gal range there will be a 10% surcharge added
     
  5. Boast Enterpris

    Boast Enterpris Senior Member
    Messages: 745

    I'm not having any price increases this year either. I have to agree with Mick, I think people are tired of price increases & taxes. I do however like the contract with the gas price spike clause. In my operation I figure fuel to be about 7.5% -10% of total route income. (Big V10 that never shuts off!) This is one of those cases where it is better to send two bills for $35.00 than to send on for $55.50. I think as long as people feel they are getting what they pay for & it looks good when they unlock the doors then you can charge whatever is within reason. Just Boast's opinion. :)
     
  6. Dwan

    Dwan Senior Member
    Messages: 879

    The increese cost of oil has to be pased along somehow. You can't just figure your direct cost but how about the indirect cost also. like the cost of sand has also gone up and they tell me it is because the cost of fuel went up, then there is the cost of repairs at the shop, they have also gone up due to the cost of energy. how about the cost of a new truck or plow and the cost of milk and bread, all can be blamed on fuel increase in one way or another. so the customer can expect you to also rase your price a little, unless you have a large profit margin then it will only hurt you in the long run not to take advantage of the excuse for raising your price. Next year if fuel price drops what excuse are you going to use for wanting to raise your price? "I want a new truck so I am raising your price" I don't think that would sell as easy.
     
  7. PLOWMAN45

    PLOWMAN45 2000 Club Member
    Messages: 2,846

    my accounts are staying the same cant raise em on that to many people out there they will go somewhere else
     
  8. gpin

    gpin Senior Member
    Messages: 390

    I'm not raising prices on my current customers. I'm familiar with their lots and do not want to risk losing their business. New contracts bid at a higher rate, 10% more.
     
  9. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Exactly.
     
  10. ADLAWNCUTTERS

    ADLAWNCUTTERS Senior Member
    Messages: 212

    I Normally keep my prices the same year after year.But with diesel @ 2.00 a gallon and most likely going up i am raising my prices up at least 10 % on thier monthly price.Here in buffalo it could snow every day . my customers are all commercial and they will pay it , if not they could buy there own super duty and pay $80.00 to fill up there tank.
     
  11. sbrennan007

    sbrennan007 Senior Member
    Messages: 350

    People including myself are really getting sick of all these "fuel surcharges".

    The company that does my lawn said they were going to increase my rate due to fuel cost's going up. I told them that it was kind of them to let me know, so that I can look for someone else now!

    This is a sore subject these days with alot of people, be careful of what you do. Even commercial accounts (like I plow) have other companies they can go to.

    Once their gone, good luck trying to get them back.

    I too pay the same prices you do ($2.00 for diesel), but how much is this actually cutting into your overall profits? So much that you can take the chance in loosing the account all together?

    Just something to think about.....:waving:
     
  12. DJC

    DJC Senior Member
    Messages: 481



    Same thing we are thinking about. How much does it cost you if you loose 2-3 accounts this year because of price hike. I bet you don't make the difference up in Fuel
     
  13. Big Nate's Plowing

    Big Nate's Plowing PlowSite.com Addict
    Messages: 1,266

    people who are worried about a few extra cents in gas really make me wonder!

    if you think about it, lets say your vehicle gets 20 mpg and gas is $2.00 a gallon ok that equals 10¢ a mile in fuel... lets say gas jumps to $2.10 WOW guess what now it costs you 10.5¢ a mile lets get a little extreme and say gas jumps to $3.00 a gallon.... wow your cost is 15¢ a mile.

    I'll use my durango for an example, it gets 8.5 miles to the gallon while plowing, current gasprices here are $1.57 soooo it costs me 18.4¢ a mile my route is on average 43 miles so 0.184 x 43 = $7.91

    now lets say gas rises to $2.00 a gallon, 2.00/8.5= 23.6¢ per mile or $10.11 in fuel to do my route holey Shyte a whoppin $2.20 difference, now I know I am not going to go broke over $2.20 and if it is that important to you then shake 25# less salt and bill for a full bag

    ... $2.20 LOL I spend 5 times that in pop/coffee each time I go out pumpkin:
     
  14. PLOWMAN45

    PLOWMAN45 2000 Club Member
    Messages: 2,846

    well if i owned a diesel you can bet id run heating oil with dye and treatment for the fuel i can probably get it 1.25 gallon
     
  15. DJC

    DJC Senior Member
    Messages: 481

    ... $2.20 LOL I spend 5 times that in pop/coffee each time I go out pumpkin:[/QUOTE]


    Just what i was thinking :)
     
  16. derekbroerse

    derekbroerse 2000 Club Member
    Messages: 2,377

    I raised the rates a few dollars each already last year. I think people will appreciate that it isn't changing again this year.

    Around here, we are up around $.75-.80 per LITRE! IE: almost four litres to a gallon, do the math yourselves!

    :cry:
     
  17. jhook

    jhook Senior Member
    Messages: 375

    Gas

    I agree with most of these posts. I live in Ontario too Derek, paying 84 cents up here. Raised some prices last year already. But again, if fuel goes up by 20% even, how much extra are you paying per driveway? Maybe a couple of bucks over the whole winter. Woopie. What is the cost of aquiring a customer? More than that. Leave price alone, keep happy customers and charge a bit more on the new jobs. I have a policy where I don't raise prices on new jobs for the first 2-3 years. Keeps them happy, then when I do have to up it, they seem to understand. You start upping the tab every year, not good.
     
  18. derekbroerse

    derekbroerse 2000 Club Member
    Messages: 2,377

    I agree with you completely, jhook, my prices are staying the way they are for a while yet! What I didn't mention was that most of my original contracts came from the same guy I bought the truck from years ago and he had done them for several years also and the rates had not been raised in at least the three years I have been running the truck. I understand they had not changed in some time before that either. My guess is they were rather high to begin with :p

    And I meant it when I said 'a couple of dollars', quite literally in most cases. The contract that got the largest increase was a one-hour job that in all honesty I was hoping to not have to do again by increasing the rate $20. (its a seriously crap job!) She phoned me and said that was fine thankyou for another year!!! lol I think she knows her property is a hazard!!!

    :bluebounc
     
  19. nsmilligan

    nsmilligan PlowSite.com Veteran
    Messages: 704

    I use about 4000 liters or 1000 gals of fuel/month during plowing season, using Nates figures a price increase in fuel from 1.57 to 2.00 means $430 in extra fuel charges or plowing 8 driveways @ $50.00 for free! payup I don't think so, my surcharge clause is tied to the price of fuel , a .5% increase per cent a liter, on commercial and seasonal accounts only. One account is billed just under $10,000 a month for the contract, so if we were to bill today they would be charged about $500 extra for the monthly bill.

    Bill
     
  20. PLOWMAN45

    PLOWMAN45 2000 Club Member
    Messages: 2,846

    i just got a letter from my prvt hauling company that he will charge a 1.78 fuel charge and extra money to tip his trucks i called the city of norwalk its illegal to have fuel charge increase so i guess he is out one customer