Should PCOs Add a Gasoline Surcharge?

CLEVELAND — With the cost of gasoline continuing to skyrocket and with dim prospects of these costs going down, PCOs are confronted once again with the question of whether or not to add a gasoline surcharge.

In a May PCT Reader Poll, more than half of respondents said that have added a surcharge, while 27 percent said they don’t believe in surcharges and absorb the costs as a business expense. Another 21 percent responded that they haven’t added such a charge, but are considering it.

Fuel Surcharge Poll

Q: How do you feel about adding a gasoline surcharge to your customers' bills? I don’t believe in them. I’ll absorb the costs as a business expense: 27% I will and have added such a charge when I feel it is necessary: 51% I haven’t added such a charge, but I’m considering it: 21% Source: PCT Reader Poll Week of 5/7/2007

PCT checked in with several PCOs from various parts of the country to see how they feel about gasoline surcharges and find out what they are doing to combat the high price of gasoline.

“We don’t add gasoline surcharges,” said Clarke Keenan, president of Waltham Services, Waltham, Mass. “By definition, a surcharge is temporary price increase to offset higher fuel costs, meaning the surcharge should be removed when gas prices decrease. I think you can get into trouble with surcharges because you will forget about them. Plus, gas prices are all over the board. This past winter it was down to about $2 per gallon around here.”

Waltham prefers to address fuel costs on a yearly basis — when the company budgets for the coming year. Waltham charges its customers slightly more each year, so rising fuel costs are one factor that goes in to determining how much to raise its prices. “So it might be that we raise prices an extra percentage point,” Keenan said.

Another PCO who has taken a similar approach is Jeff Springer, president of Des Moines, Iowa-based Springer Pest Solutions. “We’ve always done annual price increases on all of our customers to cover the costs of doing business — and these include gas prices, but also include things like increased costs of chemicals,” he said. “I think the key is you need to do it every year and be consistent.”

Springer said his company has taken measures to deal with the rising fuel costs, including using routing software to tighten up routes, but he said he thinks the biggest thing PCOs can do to reduce fuel costs is to reduce callbacks. “It all goes back to training technicians to do a better job at their accounts and a better job dealing with customers so that we don’t have those callbacks,” he said.

Hal Stein, CEO of San Francisco-based Crane Services, has been adding yearly price increases for 30 years and said he’ll explain these costs to customers, but only when asked. “I just think don’t think it’s a good approach to have a line item on a customer invoice for gasoline,” said Hal Stein, CEO of San Francisco-based Crane Services. “Doctors are not going to have a line item on their bills noting an increase in prices because the cost of pencils went up.”

Stein said the bigger issue is that the pest control industry has underpriced its service for so long that customers sometimes have trouble accepting price increases — regardless of the reason. “I wish our industry would charge what is acceptable for the vital services that we provide.”