When selecting a fuel card for your trucking fleet there are many different variables worth considering. The one we hear most often from our prospective new customers is, “How is my price calculated?” To answer that question we have to look at the two industry standards for fleet card pricing, they are “retail minus” and “cost plus” pricing.
What is “retail minus” pricing?
Retail minus pricing is exactly as it sounds. It is a specified cents per gallon reduction from the posted sign on the corner. For example, if you are being priced at retail minus $.05 and the retail price for diesel fuel is $3.00 per gallon, your price from your fuel card vendor would be $2.95 per gallon. The retail price can fluctuate considerably depending on where the driver fuels as well as the type of station where the driver fuels. Retail minus programs typically are vendor specific and discounts are static.
What is “cost plus” pricing?
Cost plus pricing is based on the wholesale cost of fuel at the nearest OPIS terminal, plus freight to the station, plus applicable taxes (federal and state), plus a set markup. The set markup covers the commission paid to the station and the costs incurred by the card issuing company.
Here is a diagram to show how it works using our Guttman Fuelman Fleet Card.
Benefits of the cost plus pricing system:
The retail price of fuel is typically a substantial amount higher than the wholesale cost of fuel in the market. The wide margin between the wholesale cost of fuel and the stations retail posted price can provide a considerable savings opportunity over the course of the year. This pricing system provides a consistent and measurable savings without fleet managers directing drivers to drive the extra miles to fuel at a station with a low retail posted price.
Interested in a fuel card with cost plus pricing? Call us at Guttman Energy. We can help!