Profit the fuel delivery guy makes..

Been wondering something, what"s a normal % profit the fuel delivery company makes off me bringing me their products. We have an off road diesel tank and gasoline tank. Most of what I have for work is gasoline (trucks, mowers, etc.). Sometimes his fuel price is a little more than the stations in town and sometimes it"s a little less. I don"t know how they buy it and if they can keep some of the middle guys out of the equation by going straight to the terminal. I"m buying about 500-600 gallons of gas a week and that"s not chump change for sure. My biggest reason in wondering this is I think he makes substantially more money off me than I do off him doing the work we do currently for them. Makes me think I have a leg to stand on to go ask for the chance at doing more work for him, the office and family members in the business. Apparently I"m the big winner (loser) for weekly gasoline sales. Most of their bigger deliveries are off road diesel.

Everything is negotiable. Why not ask for a better price on the gas?

the station buys in full tanker load 8500 gallon plus clerk makes min wage ...and you buy drink fried chicken and candy bar when you go into store and you PAY for it all right then ......you buy 500 gallons maybe pay in 30 days ....one truck bring direct from the terminal the reloads on a smaller truck cost some where around $150,000 for the smaller truck with a CDL driver to bring to you now would you make more off store or 500 gallons delivered to you

Forgot to say that. I've had that discussion and the info I get makes me and my wallet possibly feel better, but I never know what to base it off of. They could tell me they'll give me a nickel a gallon off but how do I know for sure? They can inflate it 10 cents and then take a nickel off. I can play that game too. I'm not complaining TOOO much (but i really am). It's just that it's one of the bigger costs of running this place. I remember just a few years ago when I bought a tanker full for $1.74. Ahhh, those were the days.

Why do you care what his profit is as long as your making money? Most businesses run on cash flow and buy/sell economics -- in other words, the price for raw materials or wholesale goods is turned over to the end consumer.

Capitalism. I have several customers ask what my profit % is and try to negotiate my prices! Its none of their business. It ranges from -200% to 40% depending on the month. As an anonymous person here, it"s been 3% the last few years. It wont hurt to try to get volume discounts, but leave the profit question out of the equation, its like religion and politics!

I am on the board of our local coop and I can tell you he makes no more per gallon than your local gas station does. It also depends if he bought in an up market or a down market.

He buys for the same price as the stations unless the station is a chain store and gets a bigger discount even then it still depends on when he bought as to whether he will be cheaper than the others.

Our margins are so much per gallon. If we were getting 22 cents per gallon when gas was $2 we also are getting 22 cents when gas is $4. Margins are not % based.

Most all make money in an up market and most hope not to loose to much in a down market.

Your guy is not making anymore per gallon now then he did when gas was $2 a gallon. I'm guessing he is getting about $120 per 600 gallon deleivery. If it took him an hour to load, to get there and unload he is not getting rich with the overhead he has.

Gary

There are several factors to consider. Does your supplier have his own storage or deliver direct from a Terminal. If he has storage, then he is paying trucking on whats delivered to him, and also has to constantly recalculate his price with each delivery to average out the price changes . If no storage he is paying the going price the day he loads fuel. Have you ever called a couple other suppliers and compared prices? That would give you a better idea if prices are in line or not. One more thing - do you pay your bill promptly? You use alot of fuel and if you are slow paying thats alot of money on the books for your supplier. You may be able to get a discount for paying cash. Our supplier will take .20 off a gallon of fuel oil if payed at delivery or within 10 days. (Or maybe he really adds .20 on to people he has to bill?)

did you ever try to but ins. on a fuel delivery truck ???? try it it will blow you away as to the cost. they make no more then a gas station and that not a lot

i buy all my fuel gas and propane from southern state coop, they charge 5cents a gallon to deliver it to me as i need for diesel. the price is the same as if i bought it at the pump the day i call for fuel . sometime they are a little higher then some of the other place in town but they are the only one that send me a check each year for what i have bough . as a matter of fact i got two check yesterday one for part of this years and one for the balance of 2003 and 2004.

The fuel business is very complicated because of all the fingers in the pie; the enormous cost involved with handling hazardous materials; the mega financial risk to big players; and things such as allocation and credit allowances.

BUT………………………

Your jobber makes more money off you than he makes off a service station or the service station makes in profit.

He is a jobber and buys at rack price. He then sells to service stations. His mark up to them is profit and transportation. Stations buy on net gallons that are temperature calculated.

You are a end user because you will not take full tanker loads. He needs to haul full tanker loads into his own bulk plant and then deliver in smaller trucks. You buy on gross gallons.

Look at it this way. (Numbers not correct but on used to compare.)
Service station.........
Rack price $3.00
Jobber mark up $.10
Transportation $.02
Station pays $3.12
Sells for $3.20 so they make $.08 per gallon
Jobber makes $.10 and station makes $.08

Farm or other small user
Rack price $3.00
Jobber mark up $.10
Transportation to bulk plant $.02
You pay $3.20 so $.08 is the bulk plant and small truck profit.
So really the jobber made $.18 off you but his cost was higher.

You could cut your cost if you could take tanker loads and buy at net gallons. If you do not feel you are getting a fair shake price fuel from another jobber.

Guess I'm not a "most business". I have set yearly and multi year contracts, I can't pass on the cost like you said, at least not weekly or monthly. I have to take a risk and forecast out. If I get too greedy, there's 20 other companies trying to get the work.

BIL owns and runs a fuel delivery business. He averages making about 12-15 cent per gallon. I say average because he gains when fuel is going up, His stored, paid for fuel, is worth more when he delivers it. The kick in the pants is when prices go down. He loses money because his fuel in now worth less. So it averages out at about 12-15 cents per gallon. He hopes to about break even in the highs and lows.

Also your 500-600 gallons per week is chump change compared to most bigger fuel users. In the summer when we are hauling feed and corn hard we will burn 3000-4000 gallons of diesel each week. That is just with 5 trucks. Neighboring guy has 15 trucks hauling feed everyday. He says he is using 1500 gallon each day.

It amazes me how many guys think everyone but them is making a killing on what they sell/do. OliverGuy you stated that you could not raise your prices because of competition. You think your fuel guy has no competition???? Not many established businesses are making a huge profits any more.

You also need to consider that it costs the company, no matter who it is, at least $80.00 every time the truck stops, just to have the driver pull the hose to the tank.
It doesn't matter if he is dropping 100 or 100,000 gallons.
Truck cost, drivers wages, insurance, and administrative costs combined.
That is why it is important to try to make the truck as efficient as possible.
Not always easy when someone calls and says I need fuel today, and truck is on the other end of the territory that it covers.