With the cost of fuel on the rise. How should one figure this into adjusting rates/wages.
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The simplest and most fair to the customer-take your truck operation costs and adjust to reflect new prices. This in turn would raise your cost of doing business (but not across the board percentage) percentage. Now your wage (if that's where your cost of doing bus) is slightly higher. Figure your bids and charge accordingly.
or
I used to consider anything up to 20 miles - no extra charge.
now I'm giving thought to a mileage surcharge. Since the gas costs have risen so quickly and will continue to do so. You can't refigure your costs of doing business every few weeks.
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
How does the accountant feel about the surcharge?
Beats me, except for the end of the year tax form filling out-I guess I'm the accountant.
I suppose it would be a reimbursed expense.
On a t&m job, just another line-travel.
I don't do it yet, but I would think that there is some further figuring to do on it. You either just do the gas-leave the rest of the "vehicle operation" as is, or moderate it much like the mileage deduction the irs gives lately where from this date to ? you get more per mile deduction. Haven't heard yet if this was modified by the IRS this past year like the year b/4.
Out of town jobs I do (minimal) I know I get 12/ per mile. Gas costs X. So if I drive 45 miles one way, that's a 7.5 x $3.00=22.50 per day. When gas was 1.50 it wasn't bad. But you are right to think of twice the cost of getting there adds up.
Good idea for discussion, hope it gets some posts.
thanks.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
calvin-there is an interesting opportunity here.8-10 years ago-one of my shingle suppliers-started imposing a "safety fee"-for roof top delivery. I think they had been nicked by osha-and were required to harness the RTD guys-so for RTD- i think they charged us a $20 fee.
My other suppliers-did NOT institute the same feeBUT- most of my other suppliers-at one time or another-have instituted a "fuel surcharge"-plus sometimes they will charge for delivery-sometimes not charge.-last week- I placed an order on monday to be delivered on Tuesday. What they call an "efficency delivery"-basically delivered ANYTIME tuesday-is free-but if I wanted it by a certain time Tuesday-there was a charge. I told them they could deliver anytime from that moment-as long as the materials were there for me weds. Materials were delivered by 2:00 pm on monday-for free-which is,of course less than it would have cost me to have them delivered by a specified time Tuesday!At one point some years ago- I wanted to charge $75 to repair customers to replace a waste stack flashing-( it only takes a few minutes)------customers resisted a $75 chargeTHEN- I instituted a pricing system of a $60 service call plus $35/ hour for work done on premises-plus $15 for the waste stack flashing.
people are accustomed to paying for a service call-------they balked at $75-but didn't resist at ALL to a charge totalling $110 for the same work!!-it's all in how it's presented there is an opportunity here- when gas gets a bit more expensive I actually think this is how I am going to be able to start charging for roof estimates. I just won't present it as a paid estimate-it will be something like a fuel/service call surcharge.stephen
I think you're on to something and would like to see more discussion about it.Many of my customers live quite a distance away from me and I am 20 mi. from the lumberyard.Many are quite sensitive about being billed mileage. I used to just tack on time at my rate to compensate, but if costs continue to rise, I may have to figure something else out-an alternate way to present this plus a way to compensate for estimate time.
A mileage surcharge seems a fair to the customer system.
You drive 20 mi each way to change a light bulb.
You drive 20 mi each way to put in 8 hours on a kitchen remodel.
Somebody's gonna lose if the labor / overhead rate is raised to compensate. I think now is when thought is going to be given to it because now it's not just pennies on the dollar. Now it's a stiff cost to deal with.
A few years ago-total gas cost for about 10k miles in the year-1500.00. Now-3500.00
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
All of my customers are getting hit pretty hard by fuel prices. I'd think they'd understand
Fuel charges are great if it's a one time deal.............as the case for delivery of materials.
But for service and t&m work, it creates another line on the statement to be justified.
I've raised my rates overall with fuel as the main factor, not only for transportation, but how it impacts all costs.
And to think that this increase comes after no increases in the last 7 years!