Mike Andes breaks down the actual cost of rising gas prices for business owners. A $2 per gallon increase on a truck doing 20 miles daily adds about $4 a day or $0.50 per hour, roughly 1% of a $50/hour labor rate. He says raise prices modestly and focus on bigger problems like marketing and hiring.
Questions this video answers
20 miles per day.
2 gallons per day.
10 miles per gallon.
$2 per gallon.
About $4 per day.
Chapters
It is super popular right now on social media. Freak out about the prices of fuel and the cost to our businesses. However, it's an overreaction. I'm going to explain and show you the numbers. Now, if we have a truck and we drive 20 miles per day to a job site or a route and we use 2 gallons of fuel, or we have 10 miles per gallon on that truck and the price of fuel goes up by $2 per gallon, that means that we're going to have an extra fuel expense of about $4 per day. Okay? Now if we have eight hours that we are working on a job site with one employee, that means $0.50 per hour of labor is the extra expense born by having that fuel cost. If we charge $50 per hour to the customer, that literally means is a 1% increase in the amount of the labor rate. So this is an overblown reaction. People talking about fuel surcharges and all the rest of it. Just focus on raising your prices overall and absorb the extra cost of fuel. It's not a big deal. And your time and energy should be spent on bigger things like marketing and hiring.
