Contractors Share Ways to Deal with High Fuel Prices
Unpredictable gas prices have forced lawn and landscape contractors to consider whether to absorb higher costs or pass them along to customers, reports Lawn and Landscape Magazine. B. Rushing Lawn and Landscaping, Alexandria, Va., instituted an across-the-board surcharge of 5 percent of the total job cost, says President Brandon Rushing. Rushing calls it a cost-of-business increase, because every supplier the company uses has raised fuel prices. Rushing has reviewed how he routes his equipment and now does more tasks at one stop. Daniel Hanson of SCLM Co. in La Verne, Calif., says his company looks at profit margins for each account. Clients under the target profit margin get a letter requesting a price increase due to fuel costs. Some fuel costs are absorbed on contract work because the job is based on time and material plus overhead. Fuel is covered in overhead.Hanson canceled his accounts with major fuel vendors and started an account with Wright Express, a service that allows companies to closely track vehicle fuel and service expenses.Blade Runners in Fairfax, Va., does not add a blanket surcharge to all accounts. Rather, the company measures how many hours the equipment runs on site and adjusts fuel costs accordingly, says President Eric Storck. Tohill Landscape Management of Atlanta increased every job by $5. Owner Kelly Tohill hadn’t raised prices previously in five years. He says he needs to make $30 per man per hour. Tohill also adjusted some routes and dropped customers on the other side of Atlanta.Fairway Landscape of Long Island, NY lost 37 percent of its customers after initiating a $2 per month fuel surcharge and then raising prices on top of that. However, most of these contractors say their clients understand the increases, as fuel costs affect everyone, reports Lawn and Landscape Magazine.