Suggestions for fuel surcharge?

Discussion in 'Business Operations' started by OKSooner, May 1, 2011.

  1. OKSooner

    OKSooner LawnSite Member
    Messages: 235

    Hey you guys,

    Check out the historical data at Gasbuddy here:

    Gas peaked at about $4 a gallon in July of 2008.

    We're about at $4 a gallon now on average. (Here in my hometown I paid $3.85 yesterday.)

    I think it's gonna be different this time. I think someone we all know wants gas prices to be high. I'm not sure why heorshe wants it this way. Maybe it's not important why.

    Some people think we'll see $6 gas this summer. I've still got to work, and my truck still gets 8mph pulling the trailer. Looks to me like a fuel surcharge is in order.

    Are any of you guys going to do a surcharge, and if so how are you doing it? I'm not running a yes or no poll, I'm interested in how you're doing it and what you're saying to your clients about it. I should have asked sooner.

    TIA :usflag:
    Last edited: May 1, 2011
  2. Kreios

    Kreios LawnSite Member
    Messages: 66

    All my contracts have a gas clause stating that once gas reaches a specified price so much extra will be charge and so much more for every dollar it increases afterwards.
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  3. lukemelo216

    lukemelo216 LawnSite Bronze Member
    from ...
    Messages: 1,267

    on maintenance accounts we are doing 3% of the total each month. No it doesnt pay our gas, but its offsetting the costs for us. I have about 40 accoutns majority of which are in the $30-35 range. So figure 40 accounts at $30/cut is 1200/week and $4800/month at 3% thats $144.00 extra for us. if fuel continues to escalate, we will add on to it. Now for our seasonal contracts we arent adding in any sort of fuel surcharge since those are aggreed upon prices.

    Construction work we are doing a $25/per day fuel surcharge. Usually I will just work that right into the cost of the job, and not list it seprately.
  4. WheatBookkeeping

    WheatBookkeeping LawnSite Member
    Messages: 108

    The manner in which you calculate the fuel surcharges is strictly a business decision you make as owners. Use percent of sale, use mileage, use a fuel price index, use what ever logical method you decide.

    For bookkeeping purposes, the surcharges are considered an increase to your operating revenue because they offset an increase in operating expense. The surcharge is part of your gross income. If you want to record surcharge amounts separately from your other sales revenue you can certainly use a dedicated revenue account. It all gets rolled up to your Gross Revenue. Then backed out again with an incease in fuel expense.

    For sales tax purposes, the rule is that the surcharge “follows” the service being performed. i.e., if the service being performed is taxable the surcharge is taxable. If the service is not subject to sales tax the surcharge is also exempt.

    If your customer is put on notice that a “new” fuel surcharge is going into effect, they may want it itemized on their invoices - commercial customers especially. Once the surcharge is “out of the closet” and showing on the invoice, it may put you at a competitive disadvantage.
  5. dlonestar

    dlonestar LawnSite Member
    Messages: 25

    For residential contracts do not have a gas surcharge.

    For our commercial contracts we do, based on gas prices. During the snow season increases in gas are a major cost.

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