? ...fuel clause

Discussion in 'Lawn Mowing' started by GarPA, Jan 22, 2004.

  1. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    2004 will be the first time I;ve clearly spelled out a fuel surcharge clause in most of our agreements. Bascially the trigger for the fuel fee is $1.75.
    If needed at all, most of the fees per month will be small, but I dont intend to eat it if the price go bonkers as some fuel experts are predicting. I;ve read predictions that fuel may go as high as $3/gal later this year. Lets not get into the age old argument of "what happends if fuel prices are significantly lower than 2003."

    I'm interested to hear from those of you who have added such a clause last year or this year, in your agreements. MOst of my renewals have been approved but I have 2 commercial accounts that are whining about it. (they whine about everything else as well). Just would like to hear about your expereinces if you've done this... thanks
     
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I've done it Gary in the past. In fact, that is one of the VERY FEW things people IMO have whinned about. Increase fuel costs are something for the most part they understand cause they feel the same pain when they pull up to the pumps as well.

    I used to use the $2 a gallon rule (2003), but I think I will change it this year to $1.75 like you as well. BTW, ask those 2 commercial accounts if they would like some cheese with their wine...LOL
     
  3. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    Rod...thanks much for the feedback. Hearing your opinion is very valuable since you've been in this biz for 10 years.

    I dont get too p'ff at most things customers say or d0 but I REALLY have a short fuse when it comes to this fuel issue. Guess who in the end pays for the fuel surcharges being levied by UPS, trucking companies, now my mulch suplier, and on it goes....yep, WE the consumer in the end pay for ALL the fuel charges.

    I swear on a Bible that if these 2 object to this very small fee per month, if even needed at all, I will walk away from their accounts. I;ll be damned if I;m going to eat these increased costs. Margins on mowing are thin enough as it is....

    ok now that my BP is off the scale I feel better...thanks again Rod for your perspective.
     
  4. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    Not on mowing contracts but on other landscaping I just added a fuel surcharge on the bill and stated it as such. I only had one out of 25-30 that called and they just wanted to know what it was about. Granted it usually was aroung $10 but I think people are getting use to seeing it from everyone. And if it made problem I would of dropped it, kinda surprised it did not cause an uproar

    Mac
     
  5. Jimbo

    Jimbo LawnSite Bronze Member
    Posts: 1,093

    The fuel price would have to swing a lot before I put that into a contract (because I know people would complain). If you dont want complaints the best thing is to increase your price yearly to reflect inflating prices in general.
    Most companies I deal with increase their prices in January, so thats when I try to hit them with my increase letter. They seem to deal with it better when they are handing out their own increases.

    Makes sense to me.

    Jimbo
     
  6. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    agreed....but last week I was doing a little research on the long term fuel supply predicitions. One of the analysts said that it is well within the realm of possibility that 87 octane could go as high as $3 gal. While I dont think that will happen(oh yeah right...what makes me know more than they do) I dont think its a stretch to think that 89 octane could reach more than $2 a gal. if I were to build lets say 2.25 in my renewals, they'd have a sht fit over that as well...and then I have the issue of fuel coming down below 1.50 and people wanting "credits"...which some other industry watchers say might also happen. I just think that the fuel clause is the fairest and most accurate way to handle it....just my opinion however
     
  7. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I'm still in the process of writing up my 2004 residential service agreement. Perhaps I should add a line item in the payments and services section of the agreement that says that I will assess a fuel charge of an additional 10% on all services if the price of 89 octane gasoline meets or exceeds $1.70 per gallon.

    Does anyone have a written contract that spells this out?

    Please post example wordings of fuel surcharge.

    Thanks,
    DFW Area Landscaper
     
  8. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    Would it not be more efficient to base your prices on gas costing $2.50. How much would that increase your bid? and no complaining.
     
  9. DennisF

    DennisF LawnSite Bronze Member
    from Florida
    Posts: 1,381

    I've informed all of my accounts that if fuel exceeds $2.50 per gallon that I will tag on a fuel surcharge based on the number of total hours that I work on their account. My average account takes approx 30 minutes per visit or about 2 hours per month. I have figured that my equipment is using about 2.2 gallons per hour based on total hours of operation from last year and total fuel comsumed during that time. This means that each account averages about 4.4 gallons of fuel use per month. If fuel rises from $1.50 to $2.50 it will trigger a fuel surcharge of $1.00 X 4.4 or $4.50 per account per month. I think that's fair and I have not heard any complaints (yet), but I'll bet there will be some whining if and when that happens.
     
  10. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    In the past when gas has gone over $2 my customers have always been very nice and considerate about it, several offered to pay more. This year I'm going to add the fuel clause if gas goes over $2 per gallon, and don't really care if they like it or not. That extra added cost comes outta my profit.
     

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