My Fuel Escalation Clause

Discussion in 'Lawn Mowing' started by mtdman, Feb 19, 2004.

  1. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    This is what I wrote for my fuel escalation clause for my customers this year. Constructive feedback appreciated. And yeah, I know some people don't think it's a great idea. I am asking what you think of my wording on what I wrote. We've already beaten the pro/con arguement to death.

     
  2. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    And here's a question I was thinking about as I wrote that. How exactly should I introduce this to new customers? Anyone have a problem explaining their clause to potentials?
     
  3. Phishook

    Phishook LawnSite Bronze Member
    Posts: 1,143

    I like it.

    I'm 90% sure I'm going to do something very similar to that. I just have to figure out the price to start it at.
     
  4. dkeisala

    dkeisala LawnSite Senior Member
    Posts: 911

    You're kidding, right? Between this and your other thread, how difficult are you going to make it for your clients to do business with you? Do you think your customers really care how much gas cost you? If you can't figure contingencies into your costs, that's your fault, not theirs.

    Gas ALWAYS costs more in summer and winter months than any other time of the year. It's all based on supply and demand. If you are so concerned with an upswing in fuel costs, why don't you just charge all customers a bit more and spread it over your entire client base without their knowledge than making some lengthy, and wordy, diatribe in your contract? Someone tried to pass that off to me and I would tell them to p!ss up a rope.
     
  5. promower

    promower LawnSite Bronze Member
    Posts: 1,232

    Nothing wrong with a fuel esculation clause. And honestly those are very reasonable prices if were a customer or thinking of using your services an addition dollar or two per visit if gas prices skyrocket would not worry me. If the cost of doing buisness goes up, then the cost to the consumer goes up. Presenting it to new clients, I would just include in the contract and not even mention it, if they question the clause just explain what it means to them.
     
  6. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    Hey dkeisala,

     
  7. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    One question I have is:

    Will you be adjusting the escalation to suit a particular lawns needs? For example, say one lawn is 1/4 acre and the next is 3 acres, would you adjust the pricing the same for both lawns regardless of actual fuel used?

    In other words, this is all fine and good if everybody's lawn is the same size and it takes you the same amount of time to get to each lawn.
     
  8. Phishook

    Phishook LawnSite Bronze Member
    Posts: 1,143

     
  9. dkeisala

    dkeisala LawnSite Senior Member
    Posts: 911

    Yeah - I know, an opportunity I just couldn't pass up.
     
  10. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    The charges I mentioned are what I figured an average lawn will cost me in increased gas prices. That includes driving time gas, equipment gas, etc. Therefore, the charge is spread over my entire customer base. And most of my lawns are the same size.

    The minor increase that comes seasonally isn't what I am worried about. I am worried about the potential price spikes of $3 to $4 per gallon, and I want to have a method in place to offset those spikes. In 2000 when gas nearly doubled, so did my costs. But I had set my prices at the beginning of the season, and I promised they would stay the same. What's worse, going back on my word mid stream or having a prearranged method for offsetting costs and maintaining my living if need arises?

    I fuel up 2 to 3 times a week, at an average of $40 for all equipment last year at around $1.50 a gallon. If gas prices were to spike and double, that's a huge increase in expenses. I'm not going to eat that. Retail businesses don't eat costs when they increase, why should I? And were I to try to anticipate those spikes in my pricing, it would drive my prices beyond the range of competitiveness.

    Furthermore, I like to explain things to my customers. I put things in as simple terms as possible, try to explain to them my process at arriving at new policies like this. I could just slap it in there, say take it or leave it. Instead I tried to explain the whole thing, head off questions and reservations.
     

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