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Discussion in 'Business Operations' started by mower BILL, Apr 17, 2002.
they keep going up and up. should i raise my prices ,to the customer. or let go to see what happens.
This happened last year as well. I remember some of the members added a "fuel surcharge" to offset the increase for fuel.
locally $1.42 here.
I may consider a surcharge should it rise to $1.90
I have a figure that once it got to a certain price I would tack on a fuel surcharge. Told my customers about it already so just in case. Everyone understood.
Oh, my price is $1.75.
It actually went DOWN here. on April, 17 its $1.35 for 87 grade.
We'll see how long that lasts.
I think that if you take the time to figure out exactly what your increased cost is per customer - you'll find that it doesn't impact the bottom line much at all.
We did for our plowing business, and found that the impact was really quite low. However, we have not figured it for the landcape portion of the business.... so I may be all wet.
Last fall I was considering a fuel surcharge type notice to my customers, or a raising of hourly rates - which we have not done to our old core group of customers for three years. I thought this would have been a good reason to now raise rates.
Not two weeks later, the bottom fell out of gas prices. I never sent the letter - but what happens when the prices fall below $XX again? Are they going to want a corresponding reduction in cost? I guess then you don't charge the fuel surcharge. $5.00 a month for 100 customers, is $500 a month or another $5,000 a year - do you really need it?
When I looked back at the relative cost last year of fuel as a percentage cost - it didn't effect the bottom line. Fuel is about 2% of our budget.
The problem is that we see it every day when we go to the pump to fill up. What used to be $60.00 to fill truck/trailer/cans, etc. is not $75 or $80.00. Find other ways to decrease costs and become more efficient. Send a letter to your customers saying that you are doing just this. Rather than raise prices like many in the industry - you'll keep their prices the same regardless of these extroadinary circumstances because you want your customers to receive the maximum value for their dollars spent. Remind them they've hired a good business person and someone who is looking out for their bottom line as well.
I agree JAA, fuel costs didn't impact anything much last year.
It also depends on your area also. Fuel costs here are cheaper than most parts of the country. When I set my price if it gets to the $1.75 it will be a 50% increase in cost.
Lawnlad, like you, I never had to make the surcharge. Yes, when prices went back down I would have taken the surcharge off.