surcharge

John M. Formsma jformsma@dixie-net.com
Wed, 8 Mar 2000 12:13:19 -0600


Roy,


<<I think a lot of people are falling into the trap of thinking 20 cents a
gallon increase equates with large increases in prices for everything. As a
tuner who buys a tank of gas about twice a week, I look at the _real_
numbers:  15 gallons @ 1.36 is $20.40; 15 gallons @ 1.56 is $23.40. Do I
need to gouge all my customers with an increase of $5 or $10?

If you average a dozen tunings a week and charge an additional $10 each,
that's $120 a week increase to cover less than seven bucks worth of gas. Who
becomes the bad guy now, Standard Oil or you?>>

This is true only in a static market. We are in a dynamic market, which
means that everything is interrelated. Fuel prices gone up, which ups *our*
transportation cost a little. However, the price of other goods and services
will go up as well. When you factor in that all goods requiring
transportation go up, then the buying power of your dollar goes down. If
your weekly wages are, say, $1000, it is true a little extra for fuel ($5)
is not cutting into them significantly. But, when you will pay $10 more for
groceries per week, that is where you can see your buying power decrease. (I
do not know by how much groceries would increase, but once you add up the
extra cost of them plus all other products, it will be more significant than
just your transporation costs alone.)

John Formsma
Blue Mountain, MS



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