Date: Fri, 18 Feb 2000
To: moving@avatar-moving.com
From: "Mike Dammer" <mldammer@fry-wagner.com>
Subject: AMS-Forum Surcharge For Everything
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[ Return To The Hall of Fame ]LaineGrant@AOL.com wrote:
"Keep the real issues separate. The problem with decreased profits due to
discounting shouldn't be mixed with FS increases. Issues that involve fuel
(the efficiency improvements of the diesel engine, weight of the
tractors,etc.) are more on point. Passing costs on, and covering the gap
between when costs first jump and when you can pass them on to the consumer,
is not a sin."
GREAT. Right to the point. Honest. Direct.
Comments made by Michelle over the past few days have been equally as valid! She just made the statement differently and we all got defensive and accused her of begrudging us a few measly cents of a rate increase.
But her premise, and the question in general, remains valid and unanswered.
Price of boxes went up...we didn't ask for a box increase.
Price of truck insurance skyrocketed...we didn't ask for a truck insurance increase.
Cost of employee benefits is higher than any time in the history of this country...but we did not ask for a benefits increase
Fuel jumps and we scream FUEL SURCHARGE. Yet we still discount our services 60% or more. How can that be?
I'll tell you. We, as an industry, do not know how to cost out our jobs or explain our value to a customer. We talk about the concept of "I do a better job so I am worth more than my competitor." Difficult to convince a new customer of that, but, with a little sales effort this can be done. But I honestly don't think anyone in this forum would pay a 10% premium to anyone just because they said they were better than everyone else. Maybe 5% if you honestly believed the guy, but 10% is a stretch. So even if your customer buys the "I'm better than my competition" argument you still have to come down to within 5% or so of the stupidest mover in town who sets the low ball rate we all have to sell against.
But fuel cost is a "Tangible." He can see the prices going up at the corner gas station. I do not need to establish my personal credibility with a customer when I can point to a newspaper or out the window and say "Fuels goin' up. We gotta add this 5% 'till it comes back down." We can conveniently blame the mythical "They" out there that constantly ruin all our lives and everyone, for the most part goes along.
But why DON'T we have a box surcharge?
Why DON'T we have a truck insurance surcharge?
Why DON'T we have an employee benefits surcharge?
Have any of you looked at your telephone bill lately? The phone company itemizes every tax, fee, and charge they receive from anyone and then passes it on to us directly! We pay specifically for every major cost increase THEY have received for the past ten years. Ask your phone company guy to waive the FCC Line Charge. NOT GONNA HAPPEN! He has to pay it so we have to pay it for him or no telephone. WHAT AN IDEA! Actually pass the cost of the operation on to the consumer of the service! All you're left with then is your personal administrative overhead! No wonder you can now get telephone service for 4 cents a minute! You're really paying 20 cents a minute but the seller has been smart enough to pass the responsibility for the cost back to HIS provider. And don't think for a second that a little of that FCC Line Charge doesn't go to the telephone company.
So what's the answer? You can raise our prices one of two ways. Keep fiddling with the tariff...that hasn't worked yet; or start to itemize specific moving service costs like this. If you do it that way we will all eventually figure out just what our services cost and then we can explain it to our customers.
MD
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