The subject of rising fuel costs has been quite a topic of conversation among Harvest Members as well as being listed as the number one issue PLANET members are faced with. As a result, we felt it a good idea to share with you what some members are doing and give you some ideas to think about and possible actions to take.
Initially, the Head Harvesters thought it might be a bit of “nickel and diming” your customers if you try and impose a fuel surcharge but it looks like we are in this for the long haul. The price of both gas and diesel looks like it may stay at present levels with even a possibility of higher amounts before the end of the year. Remember in Britain gasoline is $6.00 per gallon with diesel at $11.50 and Europe it’s around $7.00 per gallon for gasoline and $8.50 for diesel.
Here Are Some Suggestions:
Existing Maintenance Contracts with No Fuel Increase Clauses:
Some are charging 2% of the total amount for the month. I heard one guy, not a Harvest Member, trying to charge 5% but we think that is a bit absurd. Another Member is charging 1.5% on just the mowing and other operations that use a lot of fuel. These are reasonable and fair. With the Members that are doing this, the reports are very little customer resistance.
If you decide to impose an increase we suggest that you, don’t guess your costs, but determine approximately how many gallons you will be using this year and how much more you will be paying this year over last. Figure the increase in dollars and as a percentage. With this knowledge calculate how much of a surcharge you need to add to recoup the increased costs. Now, if you decide to impose the charge and challenged by a customer you can rationally discuss the reasons for your request.
We suggest that if you do impose a surcharge you send a letter prior to or at least one that accompanies the invoice to explain the reasons. This will help to “soften the blow”.
The Harvesters suggest you immediately create a “Fuel Cost Adjustment” clause that will be inserted in your contract for any future maintenance or long-term landscape construction contracts. With such a fuel adjustment clause there will not be any debate about the surcharge, it will just be done automatically.
Hope this has been helpful. If you want to discuss this matter further don’t hesitate to contact us.