Gas surcharge...how one company handles it

[John Allo]

Gas is on the way up and the issue of charging for it heats up again. Here's how one company handles it, and I think it's a good one. Rather than commit to a gas price months ahead of time, only to see the price of gas rise again, Peapod posts and uses a sliding scale, with any surcharges computed on the day of the event.

What do you think of it?

"Temporary Fuel Surcharge

Fuels costs have risen dramatically in the last few months. Even though the rising cost has slowed in the last few weeks we are no longer able to absorb these costs and are instituting a temporary fuel surcharge. The surcharge will be directly tied to the retail price of gasoline in the New England region as published by the Department of Energy (http://www.eia.doe.gov). A fuel surcharge will be triggered only when the price of a gallon of gasoline rises above $2.75.

The fuel surcharge will be added when you first submit your order and will appear on your order paperwork as "Fuel Surcharge." The surcharge will be updated weekly according to the fee schedule posted below"

Fuel Surcharge Schedule
Average retail price of gasoline Fuel Surcharge
Under $2.75 None
$2.75 - $3.00 $.28
$3.01 - $3.25 $.41
$3.26 - $3.50 $.54
$3.51 - $3.75 $.67
$3.76 - $4.00 $.79
$4.01 - $4.25 $.92

NOTE: This surcharge is on top of a delivery charge of between 7 and 10 dollars per delivery.

 

[DougF]

John the link doesn't work, you have to be logged in.

 

[John Allo]

Thanks, Doug. Its fixed now, no logins, just the info.

 

[Valerie Hicks]

Sounds like a good way to leave a sour taste in a clients mouth...it's a little bit of last minute fidgeting with their price. Most people I know would rather know up front the rate than leave it open. We've booked events 2-3 years in advance and fuel prices have never been a loss on the contract; some of the event rates might seem pretty puny 2 years later, but the fuel line just isn't that big of a deal for us. We can compensate for some pretty drastic fuel price increases and not take a blow--and we drive pretty decent distances at 6mpg. Just my few cents worth....

 

[jokerswild]

Sounds like a good way to leave a sour taste in a clients mouth...it's a little bit of last minute fidgeting with their price. Most people I know would rather know up front the rate than leave it open. We've booked events 2-3 years in advance and fuel prices have never been a loss on the contract; some of the event rates might seem pretty puny 2 years later, but the fuel line just isn't that big of a deal for us. We can compensate for some pretty drastic fuel price increases and not take a blow--and we drive pretty decent distances at 6mpg. Just my few cents worth....

I agree, I also work in the hotel business and we deal with venders imposing fuel sercharges all the time... what we try to do is negociate a price from them that includes this price so that we know what we are going to be paying from month to month. A good example is trash pickup services.

Long story short if gas price is a concern raise the price of your services. You wouldn't have to raise them a great deal unless you do a lot of long distance events... for me most are near by or within the local area basically less than 50 mi radias of me. So in my case if it was a real concern I'd probably just raise my rates by 10-20 bucks to compensate even for an event more than a year from now. But my client would know in advance of this and the reason for the rate difference from what is currently quoted.

 

[Fred Wright]

Aren't the delivery service companies, ie UPS, FedEx etc doing this as well?

 

[Valerie Hicks]

Aren't the delivery service companies, ie UPS, FedEx etc doing this as well?

Yes, they pretty much always have, however the surcharge is added at the time of purchase, not later on. Once you ship an item, they don't come back and ask for another $1. A little different than a business such as ours.