# Fuel Surcharge



## dmjr77 (Nov 6, 2004)

Now that gas is getting close to $4.00 a gallon. What do you think a fair fuel surcharge is going to be? I have come up with a formula to help come to a fair number.

Thank You


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## Snowpower (Sep 2, 2007)

Fuel surcharge? Whats that? Where you raise your prices on your customers? Why dont you just.... raise your price on your customers.

After signing up my customers I realized my truck needs tires. Im thinking of a Tire Surcharge.

What do you think. Think it will go over well with my customers?

Bottom line is, is that if you need to raise prices now because you didn't remember that gas prices go up then call your people and raise your price. Dont hide behind some lame surcharge.

People are tired of fee's and hidden charges. What they are never tired of is an honest direct approach.


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## dmjr77 (Nov 6, 2004)

When my customers signed the contract, the price of fuel was somewhat stable. Now that fuel is over 3.10 a gallon, my contract states "a fuel surcharge will be applied id the price goes above $3.00 per gallon for regular" Other plow contractors use similar wording.


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## Snowpower (Sep 2, 2007)

dmjr77;435773 said:


> When my customers signed the contract, the price of fuel was somewhat stable. Now that fuel is over 3.10 a gallon, my contract states "a fuel surcharge will be applied id the price goes above $3.00 per gallon for regular" Other plow contractors use similar wording.


So whats your fair surcharge going to be.

Say I have a resi driveway that you plow. It's 35 dollars now. What can I expect to pay?

Whats the "New" price.


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## dmjr77 (Nov 6, 2004)

The price would be as follows:

Plowing - 11/21/2007 $35.00
Fuel Surcharge - $2.00

I feel that this is a more fair way to bill the customer. If the price drops, I can adjust the rate of the fuel surcharge.


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## Snowpower (Sep 2, 2007)

dmjr77;435888 said:


> The price would be as follows:
> 
> Plowing - 11/21/2007 $35.00
> Fuel Surcharge - $2.00
> ...


So lets say you have 30 resis. At 2 dollars increase each customer, you get your entire fuel paid for for the night by doing that.

The problem I see is that your cost went up say 30 cents a gallon, and if you use 20 gallons a night, thats a six dollar increase in your cost per event.

How do you justify making a "profit" on a supposed additional fuel surcharge because you most certainly are making a profit from the increase.

If you really wanted to be fair your surcharge would be 20 cents per customer per visit, because thats all it is costing you.

30 x .20 = 6 dollars.

Besides that. Is it really that crucial that you increase each clients price so you can make an additional 20 dollars a year off of them?

To me...making an additional 20 dollars a year isn't worth the risk of irritating a valuable, expensive to obtain client.


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## LoneCowboy (Jan 2, 2007)

So, most trucks use 1 to 2 gallons an hour of fuel
Your driveway that costs 35 dollars takes you about 15 to 20 minutes (right? should probably be less). Therefore you probably used 1/3 to 2/3 of a gallon of fuel, so 1 to 2 additional dollars to pay for your entire fuel used for that driveway. Which you bid originally when fuel was 2 to 3 dollars. Why are you charging me (the customer) for your fuel? Isn't fuel a price you pay for plowing?

However.
If I had that driveway and you came up and said "it's 35 dollars plus 2 dollars", I'd give you 35 and tell you to go on your way. We have a deal, that's the deal, don't come back, I'll find someone else
You should be billing $120 + an hour, what's 5 dollars over the course of an hour? It's the cost of doing business. If you want to raise them, raise them, but up front and honest about it. (as an earlier poster said). Gas has been at about $2.50 a gallon for at least the last 2 years. Why do you need to bill me 2 more dollars because it went up 50cents to a dollar?
I think you'll lose more customers than you gain in money. JMHO. 

One unsatisfied customer tells 20 people about their bad experience, one satisfied customer tells 2 to 3 people about their good experience. Do you really want that?


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## Five Star Lawn Care LLC (Dec 13, 2002)

if gas or desil goes over $3.00 i impose a 7% surcharge......its been in my contracts for 2 years now and have never had anyone complain


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## dmjr77 (Nov 6, 2004)

I run 3 trucks when it snows, I feel that I am not out of line with my rate.


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## Snowpower (Sep 2, 2007)

Five Star Lawn Care LLC;436013 said:


> if gas or desil goes over $3.00 i impose a 7% surcharge......its been in my contracts for 2 years now and have never had anyone complain


Why dont you just raise your overall price at the onset. Christ sakes. Diesel hasn't been below 3 dollars a gallon for a long time and never will be again.


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## dmjr77 (Nov 6, 2004)

I already did an overall price increase this year, I went up $1.00 over last years rate. How was I supposed to know that fuel was going to break $3.00 a gallon and now possibly $4.00 a gallon, I am not running a charitable business.


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## Snowpower (Sep 2, 2007)

dmjr77;436023 said:


> I already did an overall price increase this year, I went up $1.00 over last years rate. How was I supposed to know that fuel was going to break $3.00 a gallon and now possibly $4.00 a gallon, I am not running a charitable business.


When you make a 1000 percent profit from a surcharge increase I should say you certainly aren't running a charitable business.

And no offense guys. Its just a different way of doing business. If your customers are ok with the way you do it. Then keep doing it.

Im just saying its not the way I do it, and I felt it necessary to point out just a basic bit of actual mathmatics.

The numbers are not exact. But a surcharge by its very definition is to recoup additional unplanned for expenses.

Not to make an additional profit.

If you want to raise a clients price in mid stride then at least call it what it is.

A price increase.


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## dmjr77 (Nov 6, 2004)

Everyone that I have talked to about this subject is in agreeance that between $1 to $2 dollars is fair as of right now, if it breaks $4 a gallon it will have to be looked at again. Another consideration that should be looked at is price of engine oil, that has gone up alot since last year as well.


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## Snowpower (Sep 2, 2007)

dmjr77;436045 said:


> Everyone that I have talked to about this subject is in agreeance that between $1 to $2 dollars is fair as of right now, if it breaks $4 a gallon it will have to be looked at again. Another consideration that should be looked at is price of engine oil, that has gone up alot since last year as well.


List all the things you buy that went down in price since last year.


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## dmjr77 (Nov 6, 2004)

What is your point on that question? Everything that I have bought over the past year from my insurance, parts, supplies etc, have gone up quite a bit. My commercial insurance for my trucks and my insurance and bonding for my business went up 35% this year for no reason. I have had to make no claims since I have been business.


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## Snowpower (Sep 2, 2007)

dmjr77;436051 said:


> What is your point on that question? Everything that I have bought over the past year from my insurance, parts, supplies etc, have gone up quite a bit. My commercial insurance for my trucks and my insurance and bonding for my business went up 35% this year for no reason. I have had to make no claims since I have been business.


My point is with all those increases you choose a to raise prices 1 dollar per visit.

With a .20 cent per visit increase in your fuel cost you want to raise prices 2 dollars.

Lets say you visit each site 15 times. Thats a $2.30 increase in your cost per client per year. Yet you want to raise their price 30 dollars.

The math just doesn't jive.

My point is that people generally wont complain over 2 dollars here and there, but if you do the math, your surcharge is huge in comparison to what your increased costs are.

Just pointing out that when you said originally that you wanted a fair increase to charge, 2 dollars isn't it. That might be fair for you, but it's not fair to your client.

Is it a big deal? Will they freak out? No, but you wanted a fair increase suggestion and I gave it to you.

Twenty Cents per push.


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## dmjr77 (Nov 6, 2004)

I am going to stick to my original plan. Since my driveways are far apart with a driving involved, 20 cents will not cut it up here in this area. 

I got a notice from the lumber yard that I deal with last week. They are charging a flat $15.00 delivery/fuel charge fee if they deliver. Would a good businessman aborob this cost? I dont know of anyone that would.


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## dmjr77 (Nov 6, 2004)

Just did the math:

Driveways 62 x .20 = $12.40
Driveways 62 x 1.00 =$62.00

Truck 1 - 26 Gallons
Truck 2 - 26 Gallons
Truck 3 - 34 Gallons

Total 86 Gallons x $3.15 = $270.90

Can you fill 3 trucks up with $12.40 worth the gas?


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## Snowpower (Sep 2, 2007)

dmjr77;436095 said:


> Just did the math:
> 
> Driveways 62 x .20 = $12.40
> Driveways 62 x 1.00 =$62.00
> ...


What difference does the size of your trucks gas tank have to do with anything?

And what are you talking about filling a tank for 12.40? That number is your actual increase in fuel costs. The cost you want to "Surcharge" or "Pass Along" to your clients fairly and evenly.

What you want to do is increase their price. Not apply a surcharge. Because if you applied a surcharge it would be .20 per visit.


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## stroker79 (Dec 2, 2006)

Snowpower, It seems like its your personal vendetta to preach against Fuel Surcharges. I am not sure how many Professional services you have hired but if they drove to you chances are pretty good there is a fuel surcharge. You even pay for it on your plane tickets. Its designed that way so that if the fuel goes up, the charge goes up, if the fuel price goes down, then so does the fuel surcharge. Just about every single company that relies on trucks to do thier job charges a fuel surcharge.


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## bribrius (May 5, 2007)

think i have to agree with snowpower on this. i see what he is getting at.


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## stroker79 (Dec 2, 2006)

bribrius;436138 said:


> think i have to agree with snowpower on this. i see what he is getting at.


I see his point also, exactly. But at the same time he is making it seem like it his way or no way which was the reason for my post. The surecharge should be used as a supplement over a designated fuel price.


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## Snowpower (Sep 2, 2007)

No vendetta. Just pointing out discepencies in the math is all. Like I said. If you need to charge your clients more because you failed to plan accordingly then do so, but dont bullcrap them and call it a fuel surcharge.

Call it what it is. A price increase.


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## dmjr77 (Nov 6, 2004)

Again, I did not fail to plan for the increase! I went up $1.00 over last year on the base rate. When goods and services increase sharply furthermore, you have to do what is needed to cover costs. Like I said before, the lumber yard I deal with all the time always delivered for free, now they are charging a $15.00 fee to deliver (as of last week).


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## kcplowmata (Sep 15, 2007)

do we give any money back if the gas price falls below what we bid cost of gas?


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## Snowpower (Sep 2, 2007)

kcplowmata;436176 said:


> do we give any money back if the gas price falls below what we bid cost of gas?


Badoomp Chish!


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## dmjr77 (Nov 6, 2004)

I bill storm to storm. If the price of fuel was to fall below enough to not warrant a fuel surcharge, I wont asses one.


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## stroker79 (Dec 2, 2006)

kcplowmata;436176 said:


> do we give any money back if the gas price falls below what we bid cost of gas?


DUH! Thats the point of a fuel surcharge! You arent going to raise/lower your contract price are you??!! That is the whole point, when the fuel drops, so does the fuel surcharge.


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## bribrius (May 5, 2007)

all good and fine until someone comes along that actually bills out higher than you but steals your customer anyway because they stick to the price. i see the operating cost increases as something the business owner has to deal with not something that should be passed on to the customer to have to be concerned with. someone comes along and quotes higher than you but guarantees the price. you will probably lose the customer. also if you run the margins that tight to have to be concerned with the fuel surcharge that you have to put it in not only are you originally mis quoting your customer but your also running so tight in your margin that any type of breakdown or unplanned expense will kill your bottom line. if the delivery on whatever you buying charges fifteen dollars so be it. they didnt agree to quote you a service amount for the season and work on a per call basis. you buy it and call they bring it. you can just go pick it up if you like and not pay the delivery charge. i have the same option when i order chinese food for delivery. doesnt mean anything and i was never quoted a set price for everytime i get hungry and decide to order chinese. your customers. whatever..

you bid storm to storm? that makes almost no sense at all. i would imagine your customers expect some sort of price if not they must plan on changing who services them from storm to storm.


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## dmjr77 (Nov 6, 2004)

Ok...Here is how it works. Before the snow, I give the customer a price on the driveway before it snows, such as $30 per plow, they sign a contract for the season (Nov 1 to April 1). In the contract there is wording stating "if the price of fuel goes above $3.00 per gallon, a fuel surcharge will be applied"

What I meant when I billed storm to storm, is that I dont charge a one time season price upfront. That method of billing can work for you or against you.


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## Joe D (Oct 2, 2005)

I don't do fuel surcharges as it makes it look like your just nickle and diming the customers. Set pricing is up front and lets people budget costs.
If you plan on fuel being 3.25 a gallon and it drops down to 2.50 will you lower your plowing rates as your planning on it costing 3.25? Not likely. Pricing is just a risk we take.
But do what works for you, this is just how I run things


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## BHISNOWMAN (Aug 27, 2006)

1.99 to 2.99 = 6% 3.00 to 3.99 = 9% 4.00 to 4.99 = 12%
Just like UPS/FEDEX & DHL.


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## bribrius (May 5, 2007)

BHISNOWMAN;436423 said:


> 1.99 to 2.99 = 6% 3.00 to 3.99 = 9% 4.00 to 4.99 = 12%
> *Just like UPS/FEDEX & DHL*.


oh great! heres $10.90 cents. (10 for base size and weight ground freight+ 9%surcharge) can you come get a small box in maine and bring it to california for me? i would like to buy the insurance too so ill give you $12.39.

just like fed ex right?


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## theplowmeister (Nov 14, 2006)

dmjr77;435888 said:


> The price would be as follows:
> 
> Plowing - 11/21/2007 $35.00
> Fuel Surcharge - $2.00
> ...


So your telling me you use $2.00 extra for fuel to do 1 Res driveway? looks to me like a charge increase. If all your concerned about is your extra cost for fuel compare your fuel cost to last year and divide it up.


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## QuadPlower (Jan 4, 2007)

Length of Driveway = 40 feet
Number of passes to clear driveway = 3
Distance Traveled per driveway = 120 feet
Feet in a mile = 5280
Number of drives that can be plowed in a mile = 44
Plow truck miles per gallon = 6 m.p.g.
Number of driveways that can be cleared on a gallon of gas = 264
Cost for gas $3.50
Cost for plowing driveway = $30
Profit on plowing driveways = ($30 * 264) - $3.50 = $7,916.50

Yea, I know about travel distances, but there is no way you are burning more than a gallon of gas to plow a 40 foot driveway.

As mentioned above, and I hate to say it, but I agree with bribrius's post about someone else having a higher price and getting the bid next year, because the customer knowes what he is being charged.


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## dmjr77 (Nov 6, 2004)

I live in a rural area. The average distance between driveways is 5 miles or more and I have driveways in 3 towns. I am going to burn alot more fuel driving to the driveways. If I lived in a more urban area, I would probaly not worry about extra cost of fuel. I feel that I am fully justified in assesing a surcharge.


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## big acres (Nov 8, 2007)

*I'm with Snopower*

Residentials will take it personally, but commercial accounts will understand if you do. they have seen it with waste haulers, distributors, etc... personally we have a surcharge clause in our contract that says we MAY (not will) institute a surcharge if prices on regular go over $3.50 for an extended period. We have never used it and plan to suck it up until contract renewal time when we can leverage it in justifying a price hike. BUT -let us say some catastrophic world event raises prices to $5 overnight???? You never know, but having a reasonable clause in print gives you wiggle room.

My biggest problem is people conveniently "forget" to drop the surcharge when the price drops. I really hated it when auto dealerships/mechanics started charging for "shop supplies" on every invoice and I refuse the charge up front.


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## jt5019 (Aug 28, 2003)

theplowmeister;436475 said:


> So your telling me you use $2.00 extra for fuel to do 1 Res driveway? looks to me like a charge increase. If all your concerned about is your extra cost for fuel compare your fuel cost to last year and divide it up.


What about the cost of fuel to get to the driveways shouldnt that be accounted for also? Not all of my driveways are right next to each other, some are a ways out. Yes i did account for that when i had them sign a contract months ago but now with fuel prices a lot higher am i supposed to just accept it? I love plowing but im not going to do it for free.


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## dmjr77 (Nov 6, 2004)

This morning I had to have a few driveways sanded. The sub who handles my sanding did them, charged me the quoted rate and then assesed a fuel surcharge on top of that. He said that is the most fair way to do things.


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## CNY Plow (Sep 12, 2007)

*Fue Surcharge - Back On Track*

dmjr77
you never did state what your formula was.
I charge a fuel surcharge also. it is fully explained to my customers righ-up-front in their WRITTEN estimate.
when i printed the cover sheet for my estimates this year the cost of gas was $3.00 ($2.98 9/10).
the cost of fuel is now at $3.40, a 13.33 % increase.
I charge my customers 1/3 (4.44%) of that 13.33% on their total fee (a $32 fee would increase to $33.42).
I too have many rural accounts and average 5-6 miles travel between them and averaging 10 mpg while plowing this increase does not cover the actual cost increase to me and my customers know this and have no problem with the cost increase.

Snowpower
if you do not have any POSITIVE input go to another thread.


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## Snowpower (Sep 2, 2007)

CNY Plow;436718 said:


> dmjr77
> you never did state what your formula was.
> I charge a fuel surcharge also. it is fully explained to my customers righ-up-front in their WRITTEN estimate.
> when i printed the cover sheet for my estimates this year the cost of gas was $3.00 ($2.98 9/10).
> ...


lol.....No.


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## dmjr77 (Nov 6, 2004)

My Formula is the following

Under 2.99/gal - No surcharge
3.00 to 3.49 - $1.00
3.50 to 3.99 - $2.00

Granted this is just an estimate and does not include any large residential driveway, which I have several of them


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## QuadPlower (Jan 4, 2007)

CNY Plow;436718 said:


> dmjr77
> you never did state what your formula was.
> I charge a fuel surcharge also. it is fully explained to my customers righ-up-front in their WRITTEN estimate.
> when i printed the cover sheet for my estimates this year the cost of gas was $3.00 ($2.98 9/10).
> ...


At $3.00 a gallon you billed a customer $32.00
At $3.40 a gallon you billed the same customer $33.42
Gas went up $.40 and your cost went up $1.42. 
That is a Profit on the fuel surcharge of $1.02
You get 10 m.p.g. and drive 6 miles between sites. Do you burn more than 1 gallon of gas to do 1 customer?

Should you eat that $.40 ? I would, but that's me. That is .0125% of the total bill.

On the other hand. You have it in your contract, the customer read, understood, and signed it. If you charge it, they have to pay it. But they don't have to re-sign you next season.


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## dmjr77 (Nov 6, 2004)

I have had pretty much the same plow route (plus and minus a few) for the past 8 years and I have used the same contract for the same amount of time. I would find it pretty hard to believe that they would switch to someone else. 

On a side note, I spoke with the other local contractors in the area. Most of them are going to be rasing there prices up 25% or more depending on the size of the driveway and driving distance. On a $30.00 driveway, they will go up $7.50.


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## QuadPlower (Jan 4, 2007)

I don't have any problem raising your prices. It is good for our business. Charging a different price everytime the price of fuel changes can upset people. Just because other areas of the economy do it, doesn't make it right.

Assuming someone won't leave you just because you have been with them for 8 years is kind of silly. Upset them enough with either price or service and they will be gone.

I bought all the gas I will need for the season yesterday. Should I have waited until the price dropped a couple of cents? No, my profit margin is higher than if the price of fuel changes.


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## YardMedic (Nov 29, 2006)

Quad, people aren't raising their prices enough to fill their tanks on EVERY driveway; it's all proportionate to cost. Why is it so unreasonable to follow the rises in fuel with rises in plowing charges? All other costs are passed on to the customer, from truck purchase to insurance to registration to employee salaries and associated costs. I'd be more inclined to raise rates based on longterm changes (ie increase of fuel over 4-5 years), and in fact have done that over the years to account for THAT particular expense. I don't believe for a second that the cost of fuel should dictate what we make for profit; a reasonable profit will come from a fair charge for the job done, and fair prices come from the market value of all factors involved. If I say that my hourly pay will remain the same year to year, truck payment stays the same, registrations probably go down a little each year, insurance goes up a little each year, and fuel goes up, I'm cutting my own throat by charging the same to the consumer because now the only variable in the mix is my salary (robbing Peter to pay Paul is robbing me to pay Exxon).


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## Snowpower (Sep 2, 2007)

YardMedic;437220 said:


> Quad, people aren't raising their prices enough to fill their tanks on EVERY driveway; it's all proportionate to cost. Why is it so unreasonable to follow the rises in fuel with rises in plowing charges? .


Because his rise in cost is 20 cents per drive and he wants to raise the price 2 bucks. I sure hope you really dont think thats a proportionate increase.

Now again. I get back to what Ive been saying all along. If you want to raise prices. Im all for it. Like Quad said. It's good for the business. But calling it a surcharge when your prices only went up 10 percent of what your "surcharge" is is a ripoff.


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## Joe D (Oct 2, 2005)

Snowpower;437234 said:


> Because his rise in cost is 20 cents per drive and he wants to raise the price 2 bucks. I sure hope you really dont think thats a proportionate increase.
> 
> Now again. I get back to what Ive been saying all along. If you want to raise prices. Im all for it. Like Quad said. It's good for the business. But calling it a surcharge when your prices only went up 10 percent of what your "surcharge" is is a ripoff.


I agree. All it will take is one customer to do the math and your surcharge will equal additional profit. I say go what your comfortable with though, maybe you will get a job because your initial price was lower vs me with just a set increase or maybe I will get it. This is just the risk in what ever pricing stratogy we decide to use. Good luck to all.


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## QuadPlower (Jan 4, 2007)

YardMedic;437220 said:


> Quad, people aren't raising their prices enough to fill their tanks on EVERY driveway; it's all proportionate to cost. Why is it so unreasonable to follow the rises in fuel with rises in plowing charges? On a daily bases I think it is. If gas is higher when they fill up then the customer is getting charged more. Do they prove to the customer when they filled up at $3.40 a gallon. Or is it the price the morning of the storm. Or is it the price in the afternoon of the storm, because it will probably go up during a storm. What if the gas sitting in his truck was bought at $2.50 a gallon during a freak price drop. Day of storm it goes up to $3.40. Is the customer charged the surcharge? All other costs are passed on to the customer, from truck purchase to insurance to registration to employee salaries and associated costs. I'd be more inclined to raise rates based on longterm changes (ie increase of fuel over 4-5 years), and in fact have done that over the years to account for THAT particular expense. I don't believe for a second that the cost of fuel should dictate what we make for profit; a reasonable profit will come from a fair charge for the job done, and fair prices come from the market value of all factors involved. I agree, so raise your prices at the begining of the season like you and I did If I say that my hourly pay will remain the same year to year, truck payment stays the same, registrations probably go down a little each year, insurance goes up a little each year, and fuel goes up, I'm cutting my own throat by charging the same to the consumer because now the only variable in the mix is my salary (robbing Peter to pay Paul is robbing me to pay Exxon).


I raised my prices this year. It was due to the fact that the cost of fuel went up, insurance went up, I wanted to make more money, etc.

Like I said before, my profit margin is high enough that I can eat the $.40 a gallon increase in fuel cost to make $20 on a $30 driveway. Why piss of the customer over $.40?


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## stroker79 (Dec 2, 2006)

QuadPlower;437376 said:


> I raised my prices this year. It was due to the fact that the cost of fuel went up, insurance went up, I wanted to make more money, etc.
> 
> Like I said before, my profit margin is high enough that I can eat the $.40 a gallon increase in fuel cost to make $20 on a $30 driveway. Why piss of the customer over $.40?


Are you going to lower your prices when the fuel price drops?


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## YardMedic (Nov 29, 2006)

QuadPlower;437376 said:


> Why piss of the customer over $.40?


$.40, no, but when you're losing a dollar here, a dollar there per account for all the various things, that's when I adjust & allow for a few more years of increases beyond covering all expenses. I look at it like a few years with extra coverage of expenses make up for the next few years of expenses surpassing the billing amount. I tend to stay with round numbers ($25, $30, $35 for plowing, mowing, etc). It all works out


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## Gicon (Oct 1, 2005)

Listen, the bottom line is this. If you are pricing jobs so incredibly tight that you cannot absorb a few extra pennies of fuel cost you are doing something wrong, I can guarantee it. Fuel is the smallest expense that I have, and I put 7 trucks on the road EVERY SINGLE TIME it snows. One truck can generate $1250 in sales on under $50 in fuel. Whether its $40 $50 or $60 in fuel, who gives a *****. It is a minuscule percentage of the overall sales picture per unit. This is the difference between people who stay in business, and grow their companies and continue to purchase and maintain a nice new fleet of vehicles vs. people who just cant hack it in the industry. I wish fuel would go to $10.00 per gallon so more people would stay off the roads. I would absorb every penny of that $10 a gallon too and not even think of charging my customers for it. If fuel is 3.50 now and it goes to 10.00 a gallon, thats an extra $6.50 a gallon. Times 15 gallons on that same $1250 in sales is a decrease in profit by $100. That is money well spent to clear the road ways during storms. That $100 loss is going to increase productivity and revenue stream by 15%


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## stroker79 (Dec 2, 2006)

Gicon;437587 said:


> Listen, the bottom line is this. If you are pricing jobs so incredibly tight that you cannot absorb a few extra pennies of fuel cost you are doing something wrong, I can guarantee it.


It still boggles my mind that in the snow industry we are expected (accoring to you and all your similarly opininated firends) to absorb the fuel price increase. Every other industry passes it along to the customer and it is expected. Unless im misunderstanding something, you guys are one in a million!


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## Gicon (Oct 1, 2005)

Some industries are so tightly margined that they cannot afford the hit. There is plenty of fruit on the tree when it comes to snow plowing. And who said driveways are worth $40 a piece. I think driveways are worth $10. So if I get $40 or $50, I guess I have $30 extra dollars per driveway to play with.....right?? No problem when it comes to paying at the pump.


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## dmjr77 (Nov 6, 2004)

I think what needs to be take into consideration here is that I live in a rural area, there is distance between driveways, where is urban area, driveways are right next to each other, thus cutting down driving distance between driveways.


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## dmjr77 (Nov 6, 2004)

I just went through my invoices and came up with a list of contractors/service people that have added a fuel surcharge.

- Lumber Yard $15.00
- Gravel Delivery $20.00
- Trash Pickup $10.00
- Sand Contractor $8.00
- Plumber (service call) $8.00

I feel that snow plow contractors should not have to absorb high fuel prices for something that was bid on before it became an issue


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## Snowpower (Sep 2, 2007)

dmjr77;437745 said:


> I just went through my invoices and came up with a list of contractors/service people that have added a fuel surcharge.
> 
> - Lumber Yard $15.00
> - Gravel Delivery $20.00
> ...


Your vendors are ripping you off.


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## bribrius (May 5, 2007)

i dont pay surcharges. they can eat them or lose a customer.
usually they end up eating them. this thread is kind of beating a dead horse isnt it? he's beyond getting opinions now he's arguing his point which he doesn't need to its his business and he can charge surcharges if he so decides too. i'm surprised he hasnt dropped the thread already. I know i gave him my reasoning in a couple pm's.

oh, sorry to hijack your thread man.


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## dmjr77 (Nov 6, 2004)

Why do you say that? I would merely say it is the cost of doing business now adays. It sounds like that everyone needs to absorbs all costs and go out of business. When UPS and FEDEX charges a surcharge to deliver a package, are you going to pay it or refuse your package?

I just looked at more invoices
- Locksmith $10.00
- Rental Equipment Delivery $25.00
- House Cleaning Service $8.00
- Mulch Delivery $30.00

Like I said before, I live in a rural area, most of you probaly live in a urban area. Services are much closer to one and other than services in a rural area, thus more travel.


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## bribrius (May 5, 2007)

dmjr77;437762 said:


> Why do you say that? I would merely say it is the cost of doing business now adays. It sounds like that everyone needs to absorbs all costs and go out of business. *When UPS and FEDEX charges a surcharge to deliver a package, are you going to pay it or refuse your package?*i told them to eat the surcharge. i also called and had them drop the extra fees for being a "bulk package" or something to do with the dimensions. told them i would never do business with them again if fees were added to my bill without my okay. and i would refuse it..
> 
> I just looked at more invoices
> - Locksmith $10.00
> ...


to each their own


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## dmjr77 (Nov 6, 2004)

Just heard on the Maine news (news 13) about the how high fuel prices are hurting truckers and barely making ends meet. I thought it was interesting.


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## bribrius (May 5, 2007)

dmjr77;437772 said:


> Just heard on the Maine news (news 13) about the how high fuel prices are hurting truckers and barely making ends meet. I thought it was interesting.


it isnt interesting its sad.

i dont compare them to snow removal. apples and oranges. they also run tight margins and you dont go through anywhere near the amount of fuel a trucking company does. nice try though. JUST DO WHATEVER YOU THINK IS BEST. it's your company. not ours.


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## dmjr77 (Nov 6, 2004)

*Union Leader Article Headline*

Thought this a good Headline:

http://www.unionleader.com/article....rticleId=96f45926-e740-4e46-b20a-c048af1ceebc


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## QuadPlower (Jan 4, 2007)

Dang I hate to say it again, but bribrius is right about this thread having everything said it in. I am only posting because I don't want him to have the last word. I bet a $ he posts again.:redbounce


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## Gicon (Oct 1, 2005)

dmjr77;437745 said:


> I just went through my invoices and came up with a list of contractors/service people that have added a fuel surcharge.
> 
> - Lumber Yard $15.00
> - Gravel Delivery $20.00
> ...


What you arent realizing is the fact that those trucks are running 10-12 hours a day, 5-6 days a week. A plow truck is only expending fuel during its route. Whether its a 1 hour route, or its on a 12 hour route, its all relative to the sales it can generate. You cant compare what the other guys are doing running 50-60 hours a week. The bottom line is you priced the jobs wrong in the first place, and now in your head you are thinking you are going to feel the pinch. If your profit margins dont generate more than a $50 bill to cover fuel, something is wrong. Get some accounts that are closer, or get rid of some that are too far away. My residential pricing is good for 3 years. I come in $5 higher than everyone else, sell myself and my company, and I have an extra $5 every time it snows for 3 years that I can roll into a few pennies here and there for fuel. Its a simple math.


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## dmjr77 (Nov 6, 2004)

I cant understand how you figure I priced wrong! When all my repeats customers signed up as group, I increased my rate $1.00 from last year. Last year I increased my rates by $3.00. When I resigned my customers, there was no talk about fuel going up sharply in a short period of time. There is an article in the Sunday paper this morning explaining this problem. One plow contractor is going to charge a flat fuel surcharge rate of $25 per month.


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## Gicon (Oct 1, 2005)

$1 ??? $3 ??? Are you kidding me? Are you alright bro? Your margins are that tight that $1 means enough to you to raise your prices and operate on uneven numbers?? $1 ???


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## dmjr77 (Nov 6, 2004)

When I went up the $1.00 this year, I merely justified it as just increase due to the higher costs of doing business. Some others went up as much as $5.00 or more. It is a rural area up here, it takes some contractors 8-10 hours to do there route since the driving distance is 5 miles or more between driveways. The spike in fuel prices caught everyone off guard. I know of one company (who has all diesel trucks) will be charging around $3.00 to $5.00 for his fuel surcharge. My trucks do more than just plow, they are on the road between 5-6 days a week since I am a property manager.


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## Gicon (Oct 1, 2005)

Don. How many snow plowing accounts do you have? What is your lowest priced account. What is your highest priced account? BTW, you do a lotttttttttttttt of talking about OTHER companies.......


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## dmjr77 (Nov 6, 2004)

I have 62 plow accounts, my lowest priced on is $30.00 and the highest one is $80.00. The other companies I am talking about are companies that I network with in the offseason such as getting mulch, gravel, etc. and they plow in the winter time.


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## Gicon (Oct 1, 2005)

DM, 62 plow accounts at an average of $40 per account will yield you $2,480.00 in sales. Take that leftover $80, buy some fuel and some breakfast, and put $2400 into the business for insurance, vehicle costs, etc. If your expenses including payroll are more than $2,400 a storm than there might be an issue there. Not to mention the extra dollar times 62......fuel hasn't gone up $62 since last year, and furthermore, screw this fuel surcharge. Do you want to know why? BECAUSE FUEL ISN'T GOING BACK DOWN.


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## dfdsuperduty (Dec 12, 2006)

DMJR I WORK FOR ONE OF THE LARGEST CONCRETE COMPANIES IN THE US PRARIE MATERIALS WE HAVE STARTED CHARGING A FUEL SURCHARGE OF 25.00 PER LOAD. WE WERE TOLD TO EXPLAIN IT TO THE CUSTOMERS THE FOLLOWING WAY FUEL HAS GONE THRU THE ROOF, HYDRO FLUID HAS GONE UP, TIRES HAVE GONE, MOTOR OIL HAS GONE UP ETC IT COVERING MORE THAN JUST FUEL THIS IS A COMPANY THAT IS TURNING MORE THAN 1,000,000 A DAY IN SALES AND THEY ARE CHARGING IT WHY NOT THE LITTLE GUY TO payuppayup:realmad:


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## ponyboy (Dec 19, 2006)

we add a fuel charge, i am in business to make make money not save the customer money. 1 customer said i pay more for gas also and her boss soes not give her a raise so she dropped me i can live with that its a business not charity i can go broke sitting home why should i lose money working?


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## QuadPlower (Jan 4, 2007)

If you're loosing money because gas went up $.40 - $1.00 a gallon then your profit margin is to tight.


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## bribrius (May 5, 2007)

ponyboy;441491 said:


> we add a fuel charge, i am in business to make make money not save the customer money. 1 customer said i pay more for gas also and her boss soes not give her a raise so she dropped me i can live with that its a business not charity i can go broke sitting home why should i lose money working?


i don't blame her. i would have dropped you too. fuel surcharge is bs. I can see it if it goes to six bucks a gallon overnight but come on..........


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## bribrius (May 5, 2007)

dfdsuperduty;439579 said:


> DMJR I WORK FOR ONE OF THE LARGEST CONCRETE COMPANIES IN THE US PRARIE MATERIALS WE HAVE STARTED CHARGING A FUEL SURCHARGE OF 25.00 PER LOAD. WE WERE TOLD TO EXPLAIN IT TO THE CUSTOMERS THE FOLLOWING WAY FUEL HAS GONE THRU THE ROOF, HYDRO FLUID HAS GONE UP, TIRES HAVE GONE, MOTOR OIL HAS GONE UP ETC IT COVERING MORE THAN JUST FUEL THIS IS A COMPANY THAT IS TURNING MORE THAN 1,000,000 A DAY IN SALES AND THEY ARE CHARGING IT WHY NOT THE LITTLE GUY TO payuppayup:realmad:


wouldn't they be better off just to raise the price of the crete? Bigger companies are usually the first to jump on something they can charge the customer. I won't completley down them for this though since cement trucks spend all day driving, everyday during the busy season. They probably should have just raised the price of the crete though.


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## MassSteelerfan (Aug 9, 2007)

I feel that you should account for the fuel before the season begins, and factor it into the price. I mean the price of gas has not really been outside 2.85- 3.30 a gallon. What I would do is factor gas on the high end, even if you said 3.50 a gallon and just factor it into the price for the season. I feel when you get into surcharges people start scrutinizing the invoice and then want to start arguing the price of gas at different times of year. just my 2 cents.


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## Scottscape (Nov 27, 2005)

I have a split opinion about these fuel surcharges.. I mean if the fuel rises dramatically im talking over .75-1.00 per gallon AFTER the bid is given, then I could understand a fuel surcharge. Why should I take into my companies expense to deliver the same services for a lower percentage even though fuel costs are higher. So your saying if you had 10 trucks, and you spend $100 a truck puttin you at 1k for those 10 trucks to run that night, then a month later, the price of fuel rises 1/3 = .75-1.00. you would be happy about just eating $333.30? Get the hell out of here. I provide a service and a good one at that and customers understand what the numbers are showing at the gas pumps and when it comes to them dropping my service over a couple dollars on there bill that is totally accounted for and understanding, then I'd rather them go somewhere else. 

This is where it comes down to price vs. quality. If you've got people that will drop you over that then they have you for one reason and that is price oppose to another contractors price.


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## ahoron (Jan 22, 2007)

where does it stop? Labor surcharge? Weekend surcharge? My 9-5 job I get time and a half on saturday and double time on sunday.So I should charge extra? Do your invoices look like my phone bill with $10 in B.S. fees? Do you give customers a credit if fuel costs less then you thought? Do you charge them extra when your equipment breaks? You didn't expect that right. Why should you have to pay the whole bill to fix it. I mean you are plowing their drives right and parts cost more. If fuel prices double or triple overnight that is one thing. But come on, Say it with me "INFLATION". IMO it's the cost of doing business and I've never been a fan of surcharges and hidden fees. I almost forgot MERRY CHRISTMAS TO ALL


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## Snowpower (Sep 2, 2007)

Im considering a "Buell Surcharge"

Seriously.


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## QuadPlower (Jan 4, 2007)

Scottscape;466979 said:


> I have a split opinion about these fuel surcharges.. I mean if the fuel rises dramatically im talking over .75-1.00 per gallon AFTER the bid is given, then I could understand a fuel surcharge. Why should I take into my companies expense to deliver the same services for a lower percentage even though fuel costs are higher. So your saying if you had 10 trucks, and you spend $100 a truck puttin you at 1k for those 10 trucks to run that night, then a month later, the price of fuel rises 1/3 = .75-1.00. you would be happy about just eating $333.30? Get the hell out of here. I provide a service and a good one at that and customers understand what the numbers are showing at the gas pumps and when it comes to them dropping my service over a couple dollars on there bill that is totally accounted for and understanding, then I'd rather them go somewhere else.
> 
> This is where it comes down to price vs. quality. If you've got people that will drop you over that then they have you for one reason and that is price oppose to another contractors price.


It is about percentages. How much money did those 10 trucks make that night burning $100 worth of fuel? What is the percentage of your fuel cost?

Month 1 = 1 truck, $100 per hour, $100 worth of fuel to run 10 hours. 10 hours * $100= $1,000 - gas ($100) = $900 profit. OR 90% profit. Fuel was 10% of your total.

Month 2 = 1 truck, $100 per hour, $150 worth of fuel to run 10 hours.10 hours * $100= $1,000 - gas ($150) = $850 profit. OR 85% profit. Fuel was 15% of your total.

I think the fuel percentage is actually lower, but you get the idea. That is with gas raising $1.00 in price over the base amount you based your bid on.

I will spend/eat $50 extra to make $850.

Disclaimer: Facts about your plowing situation may vary. All prices and times given are estimates used to help you, the snow removal professional, figure out how to best price your situation. This information is given with the understanding that the author does not live in the state, city or street where the actual snow plowing will take place and further that his equipment, labor, or needed profit varies greatly from yours. Also that snow amounts, frequency and events per season vary greatly from region to region. Further searching on this web site is recommended to gain more information is recommended.


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## Scottscape (Nov 27, 2005)

QuadPlower;467866 said:


> It is about percentages. How much money did those 10 trucks make that night burning $100 worth of fuel? What is the percentage of your fuel cost?
> 
> Month 1 = 1 truck, $100 per hour, $100 worth of fuel to run 10 hours. 10 hours * $100= $1,000 - gas ($100) = $900 profit. OR 90% profit. Fuel was 10% of your total.
> 
> ...


Its not about percentages, its about that bottom line and thats all that counts. So I am still try to understand the reason of your post..

Again why should I eat the $330.00? when their recieving the services. I have a business to run, not a charity organization. Some of you say it's the cost of doing business which also fits into the cost of the consumer recieving services. If they can't afford them get out of business or shovel their own driveway.

I may fuel surcharges. The last fuel surcharge I got was $25.00 when I rented a crane for a tree removal. I didn't question it one bit

I think everyone is happier with the fuel surcharge.. because they know that its not permanent (well lets hope not), I would certainly remove the surcharge from their invoices if prices decreased... also lets hope they don't go any higher because as of right now I don't charge a fuel surcharge.. Prices are still in the same ballpark as they were when I bid the properties


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## AbsoluteH&L (Jan 5, 2006)

So all of you that what to charge a fuel surcharge are ok if your favorite coffee place started charging a fuel surcharge. Those beans didn't walk there themselves! Maybe you forgot that EVERYONE is paying more for fuel. Do you tip the pizza guy more now?! I doubt it!


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## QuadPlower (Jan 4, 2007)

If you read all the posts you will see that fuel is a small percentage of most plowers overall costs. If your profit margins are so tight that when gas goes up in price you don't make any money then you need to re-think your bidding. Gas can go up to $5.00 a gallon and I will still make a VERY good profit plowing.

If you add a fuel surcharge during the season and you piss off the customer they could leave you and then you have gone from making money on them to not makeing money.

Another problem with a fuel surcharge is how it is figured. My garbage pick charges me a fuel surcharge. I get charged around $6.50 for the truck to drive from the last stop to my house. There is no way he burned 2 gallons driving the mile between us.

I think some of the people that are charging a fuel surcharge are scarred to raise their prices at the begining of the season for fear of loosing customers to someone else.

How many driveways can you do on a gallon of gas?
How much money did you make on that gallon of gas?
When it goes from $3.50 to $4.50 are you going to charge those customers more because you make a $1.00 less?
Become more effecient and make up that $1.00

I went from a 5.5 hours route, bought new equipment and now my route is 5 hours. Should I charge my customers less, because I'm done faster and burn less fuel?


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## AbsoluteH&L (Jan 5, 2006)

QuadPlower;467866 said:


> Disclaimer: Facts about your plowing situation may vary. All prices and times given are estimates used to help you, the snow removal professional, figure out how to best price your situation. This information is given with the understanding that the author does not live in the state, city or street where the actual snow plowing will take place and further that his equipment, labor, or needed profit varies greatly from yours. Also that snow amounts, frequency and events per season vary greatly from region to region. Further searching on this web site is recommended to gain more information is recommended.


I love the disclaimer! Some just don't get it though. Do we charge a transmission surcharge if we blow a tranny.


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## AbsoluteH&L (Jan 5, 2006)

EWWWW! That blow a tranny part didn't come out right!
My point is, YES it is a part of the business. If we didn't want to spend a ton on gas we could all wear ties, push pencils, hug trees, and drive ugly econo boxes!


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## LoneCowboy (Jan 2, 2007)

Ok, so real numbers from December
For my month of December billing (which was a very snowy month)
My fuel costs (for everything, and this is probably somewhat overstated as we did do some pasture work early in the month and is mostly diesel which was generally around $3.30 a gallon) was 4.4% of the total billing.  (2 tractors, 2 trucks)

My yearly insurance costs divided by 12 (so one month's worth of insurance) was 5.1% of the total billed

Who gives a crap about what fuel costs, even if fuel was running 10% more (3.60/gallon) it would still be less than insurance. (and insurance is pretty reasonable out here compared to what I see quoted for back east)


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## chs1993 (Nov 12, 2006)

I think this has been beat to death! It comes down to him not bidding his jobs high enough to make a profit. I think he needs to go to business management 101.


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## Gicon (Oct 1, 2005)

There is nothing more satisfying than one of my 7 trucks submitting their paperwork and fuel receipts when not one fuel receipt is more than $30. Each truck does between 32-37 driveways. That breaks down to about $1 a driveway, fuel cost only. You think I care if fuel is $3.00, $3.50, or $4.00 a gallon????? Ive got a lot better things to do with my time than chase people down for an extra dime or nickel for "fuel surcharge" Its so small, it wouldnt even make a difference in my bottom line. While this guy is out boiling down his fuel costs and how much he is going to increase his price, I just increased my sales by 5 more accounts....


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## ahoron (Jan 22, 2007)

chs1993;475670 said:


> I think this has been beat to death! It comes down to him not bidding his jobs high enough to make a profit. I think he needs to go to business management 101.


DING I think we have a winner. He's going to nickle and dime his customers to the point where they just say forget it and find someone new.


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## jjklongisland (Nov 13, 2006)

I just read this whole post start to finish and I feel there are alot of good points to both sides. It all depends where you live and what your individual situation is. Snow removal pricing etc. vastly is different all over this country. Some parts of the country get alot more snow than others. Its the guys in the snow belt that are really effected. If I get 5 storms this year I will be jumping up and down regardless of the price of fuel. I just want to say that alot of the people on this site bring up good points and I am glad that people share there opinions. Personally I don't like surcharges either and would just rather increase the price next season and simply call it what it is, inflation... But thats my take. Bottom line is we are are all providing a SERVICE and the value of the service is what customers are willing to pay in the area that you live in. That truly is the meaning of a service. Its not a product or tangible item. Its the costs assciated with doing business and a specified profit margin therefore in my opinion if it cost more to do business your profit margin should not lower, those costs have to be passed onto the customer, exaclty how you pass those cost to the customer is really what this post is all about. When I get my hair cut my barber doesnt charge me a surcharge for the SERVICE, he just increases his price normally every year or two to offset higher operating costs. A surchage should be only instituted when the cost of a tangible item increases temporarally. During Hurricrane Katrina the cost of building materials skyrocketed. Therefore a surcharge is expected. Years later the cost of those buidling material have now decreased. Unfortunaltey I do not think fuel will ever decrease unless we take over the oil fields in the middle east.


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## Scottscape (Nov 27, 2005)

jjklongisland;476401 said:


> I just read this whole post start to finish and I feel there are alot of good points to both sides. It all depends where you live and what your individual situation is. Snow removal pricing etc. vastly is different all over this country. Some parts of the country get alot more snow than others. Its the guys in the snow belt that are really effected. If I get 5 storms this year I will be jumping up and down regardless of the price of fuel. I just want to say that alot of the people on this site bring up good points and I am glad that people share there opinions. Personally I don't like surcharges either and would just rather increase the price next season and simply call it what it is, inflation... But thats my take. Bottom line is we are are all providing a SERVICE and the value of the service is what customers are willing to pay in the area that you live in. That truly is the meaning of a service. Its not a product or tangible item. Its the costs assciated with doing business and a specified profit margin therefore in my opinion if it cost more to do business your profit margin should not lower, those costs have to be passed onto the customer, exaclty how you pass those cost to the customer is really what this post is all about. When I get my hair cut my barber doesnt charge me a surcharge for the SERVICE, he just increases his price normally every year or two to offset higher operating costs. A surchage should be only instituted when the cost of a tangible item increases temporarally. During Hurricrane Katrina the cost of building materials skyrocketed. Therefore a surcharge is expected. Years later the cost of those buidling material have now decreased. Unfortunaltey I do not think fuel will ever decrease unless we take over the oil fields in the middle east.


Good post. seperates things


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## jjklongisland (Nov 13, 2006)

Thanks Scottscape, at least someone read it... LOL

It doesnt look like things are getting any better, oil was almost at $100 a barrell a few day ago... Not good for any of us...


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