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my pet peave. fuel surcharges.

Discussion in 'Business Fundamentals' started by bribrius, Nov 15, 2007.

  1. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    i realize lots of you guys started having fuel surcharges. it honestly just drives me :dizzy: .
    i went off on a shipping company a few years back over a fuel surcharge. its been around for a while. but it just drives me nuts when i see people charge it or someone tries to bill me one. i understood the first year when we all had a big increase. now we are on what, year four? year five?
    maybe i just dont understand. kind of like the shipping company i had it out with. im paying for this to get from a to b. you charge a price of x. so what is this??????? i dont pay your gas. it should be factored in x. if you cant factor it in then you eat it. so you say you use your vehicle for work so you should charge a fuel surcharge? that is bs. EVERYONE uses there vehicle for work. if not on the job then at least to get TO the job. do all companies give employees fuel surcharges? i know some pay mileage when going from one work location to anothertymusic . so are you charging for mileage for driving back in forth in the driveway or lot? maybe forget the fuel surcharge and just charge them thirty five cents a mile? sorry . i just dont see it. sorry for rant too. i just cant stand surcharges. on anything. the first year i understood. i saw how someone could had screwed up and not adjusted for expected fuel increases. now.... im just annoyed. gas went up so what. it ALWAYS GOES UP AND DOWN.you eat the cost now. you make it back later when it drops. you factor X so that your possible increases in expenses are in it. am i wrong here? i know im annoyed by them as all hell.
    Last edited by a moderator: Nov 16, 2007
  2. stroker79

    stroker79 2000 Club Member
    Messages: 2,802

    I hear you but in all my Dads contracts which are normally 3 years the only thing that he may add is a fuel surcharge. so 3 years ago diesel was no where close to $4/gallon. Around here diesel is getting very close to that. People are going to pay for "What ifs".
  3. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    is you dad a truckdriver? i could see it then. temporarily.
    or is the landscaping bus? if its landscaping i cant imagine your talking more than fifty or eighty bucks a week difference. he could eat that. if it were me i would.
    so if diesel drops does he lower the price? or does he just leave it up there?
    lots of money involved. long contract. i see your point. short contract or little money. id say eat it and fix it in the next contract. then hopefully diesel might drop and it will increase your profit margine since you figured high to account for increases.
  4. stroker79

    stroker79 2000 Club Member
    Messages: 2,802

    Ill be honset i dont know all his details. He is in the landscaping bus but he has had most of his commecial customers for over 13 years. Its to the point where last winter I was helping him shovel some walks and some lady who owns one of the chinese restaraunts in the strip mall came out and commented on how much I have grown up. I had no clue who she was but whatever, she gave a ton of awesome food. I think my dad just calls up his customers in the preseason and verbally lets them know of a price increase which is normally communicated in the form of a fuel surcharge.
  5. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Dude, don't you think you get wound a little tight on things? I personally would increase my price without indicating fuel cost in the text, but others do. Neither is wrong. Eat the cost of higher fuel prices? And so what if major increases are in year five.... are you taking a bath on the rising cost of fuel? You be the martyr, and I'll just rake in the cash & pay my expenses with the higher fee.
    Last edited by a moderator: Nov 16, 2007
  6. BSDeality

    BSDeality Senior Member
    Messages: 736

    Lets put this as simple as possible...


    This goes far beyond just a fuel surcharge, its a way to off-set inflation. Do you think Inflation is something that just stopped because gas went up? no, cost of doing business is rising every single year. inflation is typically 2-3% per year. If you're billing $100K a year as a solo op That's $3K a year right out of your potential profit. add that up over 5 years and you're looking at $15K+ that you want to just "Eat"? You've got to be kidding me. Scale that 3% up to a company billing $1M/Yr. You think they're going to just "eat" $30,000 ?

    If you think its only costing you more at the pump you're mistaken. Increased fuel costs raises the prices of all the equipment and the materials you buy.
  7. GL&M

    GL&M Senior Member
    from PA
    Messages: 223

    I don't charge a fuel surcharge, but I make sure my expenses are covered if fuel goes up.
  8. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609


    i dont know what was up with the couple posts before yours. apparently they didnt grasp that i suggest they eat the fuel but that i suggest the eat the fuel if they couldnt learn how to ACCOUNT FOR INFLATION because the fuel surcharge is bs. just my opinion.
  9. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    if you think eating three k is a lot then im not even sure what to say to you. kind of part of business. you frig up your bid. you eat the difference. oh well. live and learn. if your accounting for inflation then you wouldnt have to eat the three k because you would have normal increases in your contract. my issue is when people us bs "fuel surcharges" as the increases. If you cant plan your bidding knowing fuel might go up then what are you doing bidding? if you want a three percent inflation increase per year then write it in your contract. fuel surcharge means the bid isnt even for the amount you bid because gas went up. its just dumb. not sure how else to put it. if someone refuses to pay your fuel surcharge you deserve to eat it. i know i dont pay them. i wouldnt even ask for a fuel surcharge from someone. i might explain that i need to raise the price because of increased costs. i would explain it in advance and not mock it up to a fuel surcharge. if your using a fuel surcharge to "off set" general inflation then you deserve not to be paid. what your charging isnt even the truth. its a lie. your right that fuel effects all goods and services. but by your thinking that means if i walk into a store and buy a soda on my receipt they should list a fuel surcharge for shipping the soda. bs.
  10. BSDeality

    BSDeality Senior Member
    Messages: 736

    I miss understood your first post then. I incorrectly assumed you weren't raising your prices and sticking with the same price for multiple years and you were just going to eat the difference in fuel alone.

    This year I budgeted Diesel @ $3.50/gal back in last December., I've been fine for the whole year up until the last 3 weeks when prices went up. I had enough of a spread from January -> October to cover the increased prices now. However, that being said when I sit down in the next few weeks to budget next year you can bet your shorts I'll be putting diesel @ least $4/gallon if not $4.25 in the list.

    I personally raise my prices every single year and have never charged a fuel-surcharge. People understand when you're upfront about it. I wasn't saying I use fuel surcharges to offset inflation. But you do have to account for it even if your suppliers haven't raised their prices to you, you should even still account for inflation. It builds every year. I work for every penny on the dollar, why work for less than you should?

    Sorry to take this a little O/T
  11. Jbowe

    Jbowe Senior Member
    Messages: 167

    Interesting subject

    I do custom decks and cedar fences during the summer months. I do a lot of running especiall when I have several crews out working. What I did to off set the rising fuel charges etc was to just ad a 25.00 per day truck charge to the bid for the time figure to complete the contract. I have had people ask me what it was for and I explain it like this. Its for wear and tare when I am hauling materials to you job site, extra cost of fuel, and for the running that will no doubt have to happen during a week on a job. Once you explain that to them then they accept it as a legitmate cost seperate from the actual bid. That money I put into a seperate account and thats where I draw from when repairs are needed. It works great and I feel it a legit charge. In Alaska they would pay 150.00 delivery to have materials sent to the job so it becomes a wash anyway. I would rather get that money then pay it to Lowes
  12. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    My turn to chime in. I started a fuel charge for lawn cutting 3 yrs ago. I also raise the base price of each cut every year. The reason I went with the fuel charge was(not that it will happen) if prices go down they expect your price to go down too. When I started the charge gas was 2.50 gallon but the charge didn't start until it hit 3.00 ,then 3.50 and 4.00+ so it wasn't like I was hitting them up if the price went up 5 cents.Not one person questioned it .With one of my commercials they told me If I need to add a fuel charge do it. They said when they had deliveries the check was all ready written before the trucking got there. Now they don't even know how much it will be because the fuel charge is written in when the driver gets there.
    For snowplowing it's different for me I do all seasonal and it's 1 price no matter what happens
  13. mike33

    mike33 Senior Member
    Messages: 335

    It has me baffled also, im in the landscaping business: p/s truck. 2 bobcats. 1 mini x, hyd. seeder all take fuel. My problem this fall was im a small company and all of my fall jobs was contracted in summer time. Now i had to stick with my prices and eat it. Plowing i told all my accounts i would keep the same hr. rate from last year but charge a sir charge on price difference from last year. A small acct. say a 15k sq' lot plowed 3 times might cost add. $20.00. I feel that is fair for both of us and every one agreed. What i dont like is some guys are going to pad there bill. I plow 2 banks with surv. cameras that would be cute to plow 3 hours than bill 5 hours when your on camera. Any suggestions?
  14. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    You could spray paint the camera white and say it was a Blizzard!:D