Fuel Prices and Fuel Surcharges

[Capt Scotty]

Fuel is over $4 a gallon and the word is its going to be higher. For personal reasions I hate the word "fuel surcharge". Some operators use it to incress profits on every trip even when prices are at levels that are less then they where the year before. Yesterday I heard from a local day trip operator that is adding a fuel charge to all trips and he is only burning 20 to 30 gallons per trip. Im burning 300 to 600 gallons on a trip. Im takiing the bullet and putting it on some of my charters latter on this year. Whats everyone else doing? Am I the only one doesn't like to tack this extra charge on?

 

[Cap335]

The last time diesel went over $4.00 I raised my prices when the price went down I lowered them. I have told anyone that asks $3.00 is where I change price. I guess if it goes over $5.00 I may have to have another price level. I burn about 100 gallons/trip.

Randy

 

[mitsuguy]

Luckily, our fuel usage isn't very high as all of our sites are very close... I am with you all that don't like fuel surcharges.it always seems like a way to make more money instead of compensate for the price of fuel. Maybe what gets me is that I don't really see prices coming down. In non transportation industries, when the price of consumables goes up, there aren't surcharges, instead the price of the service goes up.

 

[Tortuga James]

I run on base price plus fuel, so I don't have to tack on surcharges. My daily charges always reflect current fuel prices. I have a built in surcharge.

If you are a walk in business, you can raise and lower price based on current fuel costs. But if you sell charters for the upcoming season 4-6 months ahead, it is impossible to set prices based on a given fuel cost. If you sell advanced charters based on $3 a gallon fuel and the price to goes to $5 when you have to buy the fuel for that trip that was sold in advance, you are screwed. I appreciate operators who can "eat" that cost increase, but as far as I know, no one operates on big enough margins to absorb those sort of losses.

"Fuel surcharge" is not such a terrible phrase when it is the difference between running in the black or running at a loss. I do think you need to offer your customers an "out" if the fuel surcharge pushes the cost of the charter past what they are willing to pay for a day of diving.

I don't know about you guys, but I would rather stay in port and cut the grass at home than run a trip that costs me money.

 

[mitsuguy]

Perhaps my frustration with charters that charge fuel surcharges is that they are rarely ever very forward about it.

I understand about the changing prices in fuel and pre-booking things, for sure, but, a couple things, first off. One is that if the change in fuel prices shouldn't be enough to change you from making a decent profit to a loss. If you are running that close to break even, perhaps you should charge more. Lets take a 200 gallon fuel usage, in which the price of fuel increased $1. If you are making less than $200 on a charter in which you are running a large enough boat or a long enough trip to justify 200 gallons of fuel usage, I would hope you are making more than $200...

Aside from that, perhaps, a base rate of what you expect fuel prices to be, then a disclaimer that if they go above xx amount, then there is a fuel surcharge... If I sign up today for a trip 4 months from now, many places I've seen have already tacked on a fuel surcharge, even though they have no idea what the price of fuel will be on the day I show up...

If it were me, in this day of fuel prices, I think I would assume a $4 per gallon fuel cost when estimating the cost of a trip. This would (should) give me some leeway in case of rising prices, and let my customers know I am going to absorb some of a fuel surcharge, but that anything over $4 per gallon, I would have to charge, based on fuel consumption, and how many people are on the boat. I don't think there is any ethical way I could (and I've seen others that do this) charge a set rate per person for the trip, knowing that I would be profiting from the surcharge... I would make some sort of rule that 2 - 3 weeks prior to the trip that I would be finalizing the pricing for any surcharges, if any, that apply, and that there would be an opt out if the surcharge was more than a certain amount per person, perhaps around $20 or $25, depending on the overall cost of the trip (day trip, I'm assuming here).

James, I appreciate your view, but, if the trip isn't costing a lot, meaning a very small amount, it may be in your best interest to go ahead and run the trip... A little good publicity and public relations is a very good thing, and may end up being very profitable in the future...

 

[Akyla]

I have a set cost for the trip based on prior years experience and in the agreement sent out to the charter group there is the information of the possiblity of a fuel surcharge if the cost per gallon exceeds $3.50 (which of course last year was a good bet for them). They were all fine with it last season and understand the issues for this upcoming one. The groups I have communicated with about it have all expected it to cost more due to fuel cost.

They will only pay the differential of the fuel costs above the $3.50 based upon the distance traveled and fuel used. I have also added a fuel cost to the sites that are beyond the "normal range" and there again only the cost of the fuel to make the additional run. This is all based on my calculations of average fuel burn per mile. It is close to reality and enough to keep it from getting too deep into my pocket.

If the cost of the floscan fuel meter system for my boat was more reasonably priced I would consider what James does with the base cost plus fuel.

But I would much rather be out on the boat than cutting the grass...

 

[Tortuga James]

If the cost of the floscan fuel meter system for my boat was more reasonably priced I would consider what James does with the base cost plus fuel....

I honestly did the best I could to calibrate my floscan but I can't get it any better than about 5% in my favor. :cool2:

 

[WickedGoodOutdoors]

Are any of you guys getting Truckloads of Bio Diesil deliverd directly to your boat?

I spoke with one supplier of Diesil and he reccomended that I buy a couple extra 275 gal fuel oil tanks and I can buy more volume when the price is down to use when it fluctuates up.



The Fuel Surcharge is Tacky & I think it will drive away more costomers than if I just increased the Charter price by a percentage.

The Kicker is I have rethought how to order my brochures and instead of printing up 100,000 at a time Ill just print a few thousand as the printer can change the trip price with electronic prepress Unlike doing a Offset Plate setup.


Most of the cost of Fuel is Taxes and we need to lower taxes and make the business enviourment more condusive for small business.

Remember to Take out the Trash Nov 2012.

I need to get these made into nice Boat Flags. anyone want to do a group Buy?

WickedGoodOutdoors@maine.rr.com

 

[mmerriman]

raise the price - whenever anyone hits me up with a fuel surcharge I look elsewhere.