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Fuel rise => Higher Prices?

Discussion in 'Bidding & Estimating' started by Snow_Pusher, Nov 9, 2007.

  1. Snow_Pusher

    Snow_Pusher Junior Member
    Messages: 27

    Just curious as to how you all think this seasons fuel costs are going to effect your business' and if you plan to adjust your prices as a result of the higher prices?

    I've seen fuel costs go up as much as .15c / gal in the past week 2 weeks now. Everyone knows winter heating oil demands always increase prices, and with the cold season still yet to come how high will these prices go? If the prices stayed where they are now, we wouldn't make any adjustments, however I'm wondering if we should incorporate some sort of fuel charge in the event the prices really sky rocket. I'm expecting to see prices as high as 3.50-3.75/gal for gas, and just as much for diesel.

    What do you all think?
     
  2. BSDeality

    BSDeality Senior Member
    Messages: 736

    everything I've quoted this year is $5-10 more per push than I would have quoted last year. These are on $40-125 driveways
     
  3. Jbowe

    Jbowe Senior Member
    Messages: 167

    Prices

    I don't think I will change my estimateing to reflect the fuel prices for my snow plowing. However during the summers when I switch to fences and custom decks I started adding in a truck fee of 25.00 per day to cover my trucks because of the amount of running that you end up doing. So in a sense I am letting those fees make up part of the fuel difference for the plowing. I was surprised when I started doing it because my clients haven't objected to the truck fees. They know the cost are rising and rather then up my bids it made more sense to put that in up front so they can see it.
     
  4. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592


    What is your fuel costs?
    Even if it takes $120 to full a 32gal tank I will make that back in about
    1/2 to 1 1/4 hrs or my first lot 2nd lot pays the Ins and wear and tear.
    3rd lot all profit payup ...lol.

    How much fuel do you burn now?
    How much more will it cost to do your route?
    Are you going to increase your price by $2 to $3 ?
     
  5. SpruceLandscape

    SpruceLandscape Senior Member
    Messages: 248

    This is a good subject. Last year I didn't increase prices even though gas costs went up and just decided to eat the loss. This year I didn't increase prices hoping that going to a diesel would offset a little because of the increase in MPG. Unfortunately diesel was around 3.10/gallon when I made this decision and now its at 3.59 :dizzy: Oh well... contracts are signed and prices have been set, all I can hope for is that everyone else decided to raise theirs and maybe some business comes my way. I won't be surprised if we see a spike high enough to take diesel to 4.00 before this season is over
     
  6. hickslawns

    hickslawns Senior Member
    Messages: 619

    We bumped up a little on a couple hourly accounts. Haven't raised them in several years and they were understanding. Started a fuel surcharge on mowing this year, not one question raised by any customers. I think if you are honest and deliver excellent service for a fair price, most customers understand you cannot continue to eat the rising costs. Now I also try to only raise prices every 3-5 years, but I feel we make a fair profit, and I feel our customers are getting the best service available in the area. I am biased though! lol In the big picture, we have had most of our customers for more than 5 years, some have been with us since we started. They know what they have, and I know what I have. Easier to keep customers than look for new ones, so I try to be fair and just raise enough to keep the same profit margins.
     
  7. powerjoke

    powerjoke PlowSite.com Addict
    Messages: 1,341

  8. framer1901

    framer1901 Senior Member
    Messages: 813

    I look at it this way: btw, these are just made up numbers

    Truck bills $1000 per nite

    If we use 30 gallons at $3/gallon that's $90.00 or 9% of Gross

    If we use 30 gallons at $4/gallon that's $120 or 12% of Gross

    While the $1 increase in fuel was a 33% increase in fuel costs, it only hit the bottom line by 3%. That 3% does buy some cheeseburgers though....

    So in the above example, if the truck billed 10 hours at 100/hr to make that 1000, you have to raise your price by $3/hr.

    In my experience, raising prices opens you up to the customer looking at other bids and possibly losing the account. Over the years, I know my accounts that are tight and the ones that are more fairly priced. Everything is profitable. Some day, when there's too much work to handle, we may raise these prices without the concern of losing the account but for now we do without that extra cheeseburger.

    I think the companies adding fuel surcharges are covering their butts due to the variation in fuel costs day to day and nationwide. Fuel costs are probably a much higher % of gross also.......
     
  9. Snowpower

    Snowpower Senior Member
    Messages: 636

    Raising prices on a customer during the given length of the agreement is taboo if you ask me. Rising fuel costs and the fluctuating price is a given anymore.

    Youd be remiss for not considering that fuel will or "can" go up 75 cents at any given time.

    It's another part of doing this work, and selling and managing this business that must be absorbed, until it can be recalculated, and adjusted at the apropriate time. Generally at renewal.

    Multi year agreements better have a clause for rexamining the price related to fuel expense and product expense each year....I would think. I've never approached a multi year bid yet.

    Customers may accept it or not but they wont like it even IF they understand it.

    Let me ask you. How many of you that would use a surcharge offer a rebate to your customers when the price falls, or you score that great price on salt for the season?

    No one. And no one should.
     
    Last edited: Nov 15, 2007
  10. powerjoke

    powerjoke PlowSite.com Addict
    Messages: 1,341

    dangit snowpwer i agree with you again!!!!! i liked it better the other wayLOL

    this topic is getting OLD
     
  11. Jbowe

    Jbowe Senior Member
    Messages: 167

    Fuel

    Were paying 3.24 a gal for regular unleaded right now. I buy 1000 gals at a time and it drops to 3.09. But thats still 60 cents higher then this time last year. I am going to wait until the end of November and then take a look at what I am useing for fuel when they come and top off the tank. I will have a better idea then and will pass that info on to everyone. I am running three truck which are well maintained so I am getting max on fuel usage. Saw in the paper here the other dya where there already talking about 300 dollar a barrel oil. thats obscene. :realmad:
     
  12. NoFearDeere

    NoFearDeere PlowSite.com Addict
    Messages: 1,715

    I raised my prices this year since I havent in the past 2 years. Most driveways went up 2-3 bucks, commercial properties went up atleast 5 bucks.
     
  13. Jbowe

    Jbowe Senior Member
    Messages: 167

    To Snow Power

    Just checked my fuel ussage for the past month and even at the cost I am paying now compared to last year at this time my profit margin is still good enough that I am not going to be adding to my customer contracts even though its written in as a possible fuel increas at any time. When I did my contract I put a clause in that stated when fuel rises by more the 50 cents that its my option to increase or not. Most of my clients are repeats from earlier years. I add about 5 new clients every time it snows. I have 5 accounts on three year contracts, 11 on two year, 45 on one year and 28 per push based on my hr rate. I bill in increments of 30 minutes so the min is half my hrly rate which works great for me. On my per push customers if they are 44 min I charge them the half hr rate and if they are 46 minutes tyhen its the full hr. Depending on amount of fall then it can go either way. I do make this clear in my contracts as well.