Are local businesses adding fuel surcharges to their services?
‘œBad excuses are worse than none.’ ‘“ Thomas Fuller
The young couple that supplies our home cleaning service announced last week the price was increasing from $80 to $90 per visit. The reason: rising gas prices.
Our plumber recently came by to free the clog in the bathroom sink. His service call was $98. In 2005, a similar event produced a charge of $80. Reason for the increase: rising gas prices.
Are gas prices really the culprit or is this just an excuse for service businesses to give themselves a raise? I figured more people would be asking this same question, but I had to surf the superhighway to Tucson in order to find a newspaper online covering this fuel surcharge trend:
Whether Fluffy needs a trim, you broke your key off trying to get into your car, your toilet is leaking or you are having an appliance delivered, the rising cost of gas is eventually going to cost you.
But you’ll see in the comments that one reader does that math and thinks the reasoning doesn’t compute:
If a van gets 10 mpg and gas has gone up $.50 gallon, that means the van has to travel 100 miles before costing the owner $5 extra. It’s just another way to raise the prices and blame gas costs.
Umm, he makes a good point. But this business of a fuel surcharge isn’t just for mom and pop type companies. UPS uses an index-based fuel surcharge that adjusts monthly. The New York Taxi Workers Alliance urged the Bloomberg administration to impose a fuel surcharge on taxicab fares. They cited soaring gasoline prices and argue this makes it harder for cab drivers to earn a living. Of course, they want the cost passed on to consumers.
What do you think? Well, if you think this is hogwash, you’re not alone. Slate magazine questioned this practice with its usual eloquence:
At first blush, fuel surcharges seem like transparent, mathematically determined means for companies to recoup their expenses for the unexpectedly high price of gasoline. But as they spread into other industries, fuel surcharges more and more seem as if they’re just an au courant way of raising prices, while duping customers into thinking they’re not paying more.
More recently, fuel surcharges have been spilling over into other services where they’re even more absurd. Today, I sorted through a month’s worth of bills from the service providers who visit my slice of suburban heaven each month. The company that fertilizes my lawn charges a $2.50 fuel surcharge every time it visits, but the tick-control sprayer (this is Connecticut, where fear of Lyme disease runs rampant) doesn’t. Both are based in the same town. The landscaper, whose Ecuadorean employees arrive each week in a gas-guzzling pickup trick and then spiff up our lawn with gas-guzzling mowers and blowers, imposes no fuel surcharge. Neither does the pool guy or Peapod. But the garbage carter does ‘“ $3 per month. Does it really require that much extra gas for the truck to travel the extra 200 feet from our neighbor’s house twice a week?
Leave it to the writers at Slate to tell it like it is. I love those guys. And that article was from 2006 when gas prices were averaging $3.03 per U.S. gallon across the U.S. I can only imagine the biting wit if the article had been written today.
But some companies are doing just the opposite’¦ using gas prices as a way to entice customers to come back:
But there’s one industry ‘“ one you probably never would think of as being impacted by the price of oil ‘“ which is now using gas cards to lure customers back. Are you ready for this? It’s prostitution.
Yes, the ladies at the Shady Lady Ranch out near Beatty, Nevada, where prostitution is legal, have also seen a downturn in business due to the high cost of gas. It seems that the truckers who normally frequent their spread have stayed away since gas rocketed past $4.00+ a gallon, and diesel even more.
And the entrepreneurs they are, they now tout a ‘œJuly Special’ on their website: spend $300 (for one hour) and you’ll receive a $50.00 gas card, a $100 card for spending $500 (two hours) and a $150 card for a $800 (three-hour) rendezvous. It’s an interesting twist on the value of providing added-value.
What have you seen from your local businesses? I’d love to hear your thoughts below. In the meantime, I’m writing a check to the cleaning service this week for an extra ten bucks so our house can continue to sparkle.
Photo credit: stock.xchng.
Interesting….In the businesses owned by me and my brothers added Fuel Surcharges have been normal for quite a long time and it is true for all shipping.
Actually around 8-10 years ago the Federal Government wanted to REQUIRE all shippers to pass on a Fuel Surcharge that changed weekly based on the Energy Information Agency weekly fuel price averages…they even have a published table that can be found on there website http://www.eia.doe.gov
Thankfully the shipping industry beat this one back and talked congress into letting them do it for themselves instead of having it imposed on them by law.
If they hadn’t the current thought is sending a package would cost TWICE what it does now as the Surcharge is based on a percentage of the shippers normal fee and the average cost of fuel…one week 3 years ago when diesel was under $3 the surcharge was 44% on a truckload…if a shipper told you the shipping fee was $10,000 for example you would then have a $4400 fuel surchage added bringing the total to $14,400.
We all got lucky the shipping industry won against the regulators on this one.
~ Roland
I know that in all of all the things I do right now, Nanny (driving to work, driving kid around) and house-calls for life coaching and parent coaching AND out of town music gigs- I really do see the price of gas effecting me significantly and turning down situations that don’t pay enough. I actually lowered my amount of days as a driving nanny partially because the amount of money I spend on gas doing that is hardly worth the hours these days if I can be working from home. Great timely article!
Roland: Interesting perspective. You bring up a good point about government regulation. I’m about fewer regulations and of the belief that in competitive markets, prices will constantly change in response to any shift in costs. But they have to be true shifts and I’m not sure I believe that’s the case with some of the home services I employ.
Moorea: Thanks for sharing your personal perspective. Good to know… perhaps, my cleaning service is really feeling the impact of the gas prices. I’m just not sure it’s $10 per visit worth it.
Well, yes of course businesses should be adding fuel surcharges to their fees. It’s only natural to pass the costs onto the consumer. How else can a small business survive, or even some large businesses?
I wonder how many restaurants survive getting through the winter. Have you considered how disastrous it must be to keep a restaurant at a comfortable temperature with the rising costs, all the while fewer people are coming to your restaurant? And, for sure no one will come to your restaurant if it’s chilly inside.