Supply House Times

To Surcharge Or Not To Surcharge?

November 4, 2008

One of the earliest stories I was assigned when I first joined the staff of Supply House Times way back in 1977 was to interview a bunch of New York City plumbing wholesalers who were trying to make “trip charges” stick amid resistance from trade customers.

Now they’re called “fuel surcharges,” but otherwise not much has changed. Skyrocketing fuel prices earlier in the year led to a rash of fuel surcharges among businesses ranging from pizza delivery to package delivery services to our industry's PHCP distributors. The latter still find it tricky to manage, as market leaders in imposing fuel surcharges typically lose business to competitors who pretend not to be charging extra.

That's almost always an illusion, of course, because the customer will ultimately pay one way or another - via surcharges or higher prices with the surcharge built in. One's visible, the other disguised.

Personally, I prefer to see itemized surcharges. This preference has less to do with the pocketbook than intellectual honesty, coupled with practical results. I think the public at-large would be more conservation-minded - and energy production-minded - if we were constantly bombarded with reminders of rising energy prices.

How are you distributors handling high fuel prices? Are you eating them, implementing surcharges, or building them into your prices?

And, now that fuel prices have dropped by about a third from their peak, are any of you rescinding surcharges?

Share your thinking with us.

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