A New Surcharge

Discussion in 'Lawn Mowing' started by procut, Jan 17, 2005.

  1. procut

    procut LawnSite Bronze Member
    Posts: 1,853

    For the upcoming season, I was considering adding a $5.00 fuel charge to each statement i send out. The way i see it, I'm probably not going to lose any accounts over five bucks, but if you multiply that $5.00 by the number of statements I print each month, it would be a considerable amount. Anyone else have a fuel surcharge or something similar?
     
  2. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    We have a 3.5% surcharge anytime 87 octane raises above $2.00.
     
  3. procut

    procut LawnSite Bronze Member
    Posts: 1,853

    That sounds like a good approach, i might try that.
     
  4. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    I wish I would have added one for diesel. Diesel prices are at $2.35 around here and the last time I got regular gas in the car I think it was $1.79. Oh well I don't use much diesel because my routes are tight. I only put about 10 miles a day on my truck. I spent $700 in diesel last year, but most of that was at $1.69.
     
  5. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Here's something to seriously consider;

    Instead of creating a temporary $5 surcharge, why not just create a permenant increase in their rates? Before you say no, listen to my reasoning.

    1) Fuel prices are probably never going to go back down to their 2001 levels.

    2) If fuel ever DOES go down to their 2001 levels, it's probably going to be time, by then, to raise your rates anyway. Don't you raise your rates on customers every 1 or 2 years anyway? Well, suppose fuel goes down in a year, are you going to want to decrease everyone back down by $5 and then in 6 months, raise them back up, because it's been 2 years? Probably not. So just do a permenant increase now.

    I did a permanent increase this summer. I increased all of our accounts by $3-$5 per week. I only had one cancellation because of it. And the several hundred dollars in increased funds I had, way offset the one cancellation.
     
  6. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    I raise my rates and charge the fuel surcharge. I raise about $5 every 4 years (25% customers per year). Some have been known to get this increase every year, but they still don't get the message :)
     
  7. the scaper

    the scaper LawnSite Senior Member
    Posts: 690

    I was thinking about doing a fuel surcharge this year but you've given me a new idea, thanks soupy :)
     
  8. tx_angler

    tx_angler LawnSite Senior Member
    Posts: 278

    I did a fuel surcharge last year and it was a pain the butt calculating the charge for each customer's invoice. This year I raised my rates and will either have a mid year price increase if fuel prices skyrocket ot just bite the bullet and eat the increase. We have a 7 day opt out clause in the contracts so that's not a problem.

    If you're seriously considering a surcharge now is the time to do a "walk through" of your billing procedures to see how much extra effort is involved.
     
  9. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    It really isn't that hard. I have it listed as a service (a couple of the most common charges) and add it just like anything else I need to charge for. At worse it might take a minute to ad a $5 charge. That is $5 a minute you are passing up, if it is in your contract and you are not charging it.

    I understand the ideal of raising prices. But this is done for so many more reasons then just gas. The fuel surcharge is understandable by all customers and should be charged above normal price increases. It's just like late fee's. Every little bit helps the bottom line.

    Besides, how long will it take for you to mail out mid season increases if gas skyrockets? I would think 2-3 times (if not a lot more) longer then just adding the surcharge to the invoice. Plus customers are not going to like a second "raise" in price in one year. But the fuel surcharge will not be frowned on.

    Just my $0.02
     
  10. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    Dang, we're starting this early this year. I use Jim Lewis' approach. Just increase the price of the service.
     

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