Cents a gallon is the wrong unit
Eighty-five cents a gallon is a big move in the headlines and a small one on a short job. Twenty-six miles at 16.5 mpg is 1.58 gallons, so the move costs $1.34 per job — against a $185 ticket, that is 0.72 per cent of the price. Round the surcharge up to the next quarter and it becomes $1.50, or 0.81 per cent.
Quadruple the distance and nothing about the price move changes, but the same increase costs $5.36 a job and the surcharge reaches 2.97 per cent of the ticket. That is the difference between a number nobody notices and a number that decides whether a route is worth running. The exposure lives in the miles-per-ticket ratio, not in the pump price.
Rounding is not free in either direction
Rounding up to the next quarter recovers $1.50 against a $1.34 cost, so each job over-recovers by sixteen cents. Across 2,100 jobs a year that is $336 more than the fuel actually cost. It is defensible as a buffer against the next move, and it is not what most people think a fuel surcharge is doing, so it is worth knowing which side of the line you are on.
The over-recovery also stops being over-recovery as the price keeps climbing. The break-even line on the page gives the fuel price at which the surcharge exactly covers the move — $4.15 a gallon on these figures. Past that, the same surcharge is absorbing again.
What the miles-per-job figure has to include
Total route miles divided by jobs on the route, not the distance from the last stop to the next one. The run out to the area, the run back and every empty mile between stops all have to land somewhere, and the only honest place is spread across the tickets. Leave them out and a surcharge will look adequate while quietly covering half of what it needs to.
If the route density is the thing you are actually trying to fix rather than the price, jobs per day works out where the drive time is going and what tightening the area is worth. For the whole vehicle rather than the fuel line, cost per mile is the wider version of this arithmetic.
Related pages
Job cost and markup takes a full cost stack to a bid rather than adjusting one line of it. Break-even sales works out the volume a fixed cost base needs. Free shipping threshold handles the retail version of the same question, where the delivery cost sits inside the price instead of beside it.
Questions people ask
What base price should I use?
The fuel price that was in front of you when the current price list was written, because that is the price your margins already account for. If nobody wrote it down, use the pump price on the day prices last changed. Getting this wrong in either direction moves the whole answer: a base set too low makes every surcharge look justified, and one set too high hides an increase you are already absorbing.
Should the miles per job include the empty running?
Yes, all of it. The run out to the area, the run home and every mile between stops are miles the job caused, and if they are not spread across the tickets they are not being recovered by anything. The simplest honest method is total route miles for a period divided by the number of jobs completed in that period, taken from the odometer rather than from a map, because a map does not know about the wrong turn or the second attempt at a delivery.
Is a percentage surcharge better than a flat amount per job?
They behave differently and which fits depends on whether your fuel cost tracks your ticket size. A flat amount per job matches the arithmetic here directly, since fuel is driven by distance rather than by price. A percentage is easier to administer and quietly charges more on expensive jobs that may not have travelled any further. If your tickets vary a lot in value but not in distance, the flat amount is closer to the truth.
What happens when the fuel price falls back?
The page shows it: once the current price drops to or below the base price, the surcharge calculates as zero. Whether you actually remove it is a commercial and a contractual question rather than an arithmetic one, and it is the part customers remember. If the surcharge was introduced as a fuel surcharge, the price table on this page is the evidence for when it should come off.
Can I add a surcharge to an existing agreement?
That depends entirely on what the agreement says, and this page has no view on it. Contracts vary on whether prices can move, on what notice is needed and on whether a surcharge counts as part of the price for other purposes. Read the contract, and if the answer is not obvious in it, that is a question for a lawyer and for your accountant rather than for a calculator.