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gas price on the rise

Discussion in 'Business Fundamentals' started by PTTP08, Jan 1, 2011.

  1. PTTP08

    PTTP08 Senior Member
    from mn
    Messages: 183

    Gas prices are never gonna go down or stay at the same price for a long time. I heard a rumor that it might reach the 5 dollar mark by this summer!! I am the small guy I have been plowing some accounts for 5 years and it is getting to the point I have to raise my price do to gas cost. I am scared that I might lose these accounts do to this. A big nation wide company like brinkman came in and I lost 2 accounts. My question is this are people doing a gas ser charge? or just adjusting the bid for the gas price? Or what are other small guys doing about this?
     
  2. bristolturf

    bristolturf Senior Member
    Messages: 435

    in our contract we have a line that states:

    salt and ice melt products are based upon market price an availalbility. Salt products are a commodity, and therefore price may increase, or the product may not be available for application at all times. We reserve the right to raise all prices up to but not exceeding 5% for every 1$ the price of fuel increases.

    We also have our own tanks of fuel so there is never any questions or comments like well cant you go to this station to fill up they are really cheap. If a question arose about the fuel increase I would be more than willing to show the customer to purchase order for the last fill up and the current fill up. And as soon as prices dip back into the normal range, we take the fuel surcharge off.
     
  3. slave2lawns

    slave2lawns Member
    Messages: 46

    We don't have a surcharge. Your in this business to make money. If fuel goes up to $5 per ga ( let's say up another $1.70 per gal ). How much fuel do you think you use @ each stop ? How much is it costing you now and how much would it at $5 ? Then figure out if you really need to raise your prices, especially if your afraid of losing your accounts. Now if everything also went up on you as well, then you have to work your numbers and see where you stand per stop.
     
  4. KMBertog

    KMBertog PlowSite.com Addict
    Messages: 1,129

    we have a clause in our contract stating if fuel prices go above certain price, we will charge a fuel surcharge.
     
  5. bristolturf

    bristolturf Senior Member
    Messages: 435

    Ive never had to use it becasue when your buying in bulk you get a better deal plus I usually try to lock in my prices for a year. Telling them appx how much fuel we will use. its just there to play it safe if fuel really sky rockets.
     
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Another update. With all that crap going on in the Middle East ,the USA Today had a story about 5.00 gas. But half way through the story they talk about 4.00 gas and if that happens people will start cutting back again and the price will drop like the last time it happened. So I don't see it going to 4 or 5 this year,but just in case I'm putting back my surcharge on lawn cutting this year,
     
  7. PTTP08

    PTTP08 Senior Member
    from mn
    Messages: 183

    whah? You put a surcharge on your lawcare? How do you do that?
     
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Because I can, It's written on the contract I send out each spring. I do it like that because I already do a price increase each year and if I raise more the normal and say it's because the price of gas went up and if it goes down then they want money back.This way it's separate from the price. and I can remove it at any time.
     
  9. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    My particular situation reults in for gas going from 2.80 to 3.50
    -~$3 extra for Truck gas
    -~$5-15 for lawn mower gas (20 minute jobs to 65 minute jobs)

    So I just raise the season contract price by $8-$18 dollars and include a note why.
    If the company ate the cost it would amount to 1 large lawn contract.
    Contract also states about gas over $5 gallon. Remember 2008 gas was $4.30gal
    $2350 2008 lawn mower gas
    $1500 2009 Lawn mower gas
    Had more lawns in 2009 also.
     
  10. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    You must have a small gas tank in your truck.Based on your .70 increase my truck would cost and extra 21.00 each time.
     
  11. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Just topped 100.00 a barrel today.Time to dig the Yugo out of the weeds and get it ready for lawn cutting season.
     
  12. wildwilly

    wildwilly Member
    Messages: 85

    do you think I can hook up my 18 foot landscaper with 2 tons of equipment to one of those mini-trucks?...they don't eat much gas lol...maybe i'll get a blade and salter to go on one too!!!!!! lol lol

    AND Libya's oil makes up 2% of world output and THAT oil goes to Europe...somehow we are bent over due to that idiot
     
  13. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    You're doing something wrong.
    All I do is drive (big trucks, 6mpg trucks) and tractors and pickups. Everything we do uses fuel (a lot of it).

    Fuel is less than 5% of my total gross.
    even a doubling of fuel (which would totally suck) would change my overall expenses by less than 5%
     
  14. musclecarboy

    musclecarboy 2000 Club Member
    Messages: 2,303

    Gas and diesel are already $4.68 up here in Toronto ($1.239 per L x 3.78L in a US Gal). I'm interested to see where they go with this mid-east crap
     
    Last edited: Feb 23, 2011
  15. musclecarboy

    musclecarboy 2000 Club Member
    Messages: 2,303

    1,000% agree. Fuel is such a tiny expense. It all adds up, but its ultimately not that big of a deal.
     
  16. snobgone

    snobgone Senior Member
    from CT
    Messages: 122

    Would you agree if your fuel bill went from 160k to 195k? Surcharge is fair to both parties esp. if attached to a government fuel index chart. Can kick it in for the unforseen spikes and drop it back down if the price goes back down.
     
  17. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    I prefer the surcharge. This way if gas goes down again I drop the surcharge and not my prices.

    Lonecowboy,you can be right,but say your gas bill was 500 a month and it's 750 that's 250 not going to something else,like new equipment or even your pocket to pay for higher gas prices for your personal car.
     
  18. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    ok, your insurance just went up 30% (happens a lot)
    Insurance is about equal in percentage terms to my fuel bill.

    so, do I add a insurance surcharge?????

    $500 a month???:laughing: I have over $500 fill ups (before prices started jumping)
     
  19. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    I try to minimize route- I think I was at ~100 miles a week last year.
    I cut 64 lawns a week, so the total increase gets divided by each customer. Hope to hit 70 lawns this year- still 4 working days-hustle.
     
  20. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Using it as an example.