Re: What's the markup on gasoline sales ???

Posted by Steve - IN on March 01, 2003 at 22:43:41 from (12.222.18.37):

In Reply to: What's the markup on gasoline sales ??? posted by Alberta Mike on March 01, 2003 at 14:34:44:

Mike,
I notice nobody is giving you a per centage to answer your question. Probably the absolute markups they quote are true - but depend upon a price for the final product.

Here're my guesstimation: The price to the gas retailer in the USA runs between 80 to 92 per cent of the price you pay at the pump -- that is a 25 to 12 per cent gross margin.

Reasons are: 1. The branded names expect to get more because of their name, and therefore charge the retailer a cut for "name". 2. Banks or card processing operations charge between 1 to 3 per cent for their services - and I'd guess that with "card pumps", at least 60 to 70 per cent pay at the pump with a card instead of cash. 3. Retailing of a commodity like gas is based on location, location, and location - as they say in real estate. If your're semi proprietary, like an Oasis- you charge more. If your're off the beaten track, you gotta charge less to attract customers.

On the backside - the local guy who runs that gas station has to pay property taxes to send your kids to school. He's gotta serve as an unpaid tax collector in the states to pay the state their sales tax or VAT in Canada cut. He can probably only hire the bottom of the class as empolyees - so he has to buy machines like pump card takers or smart cash registers to make sure the numbers are done right. What's more, he has to deal with an increasing number of environmental stuff to prove (the burden of proof is always on the guy who's selling things) that his tanks don't leak.

So if you think that's a big money making business -- you go there. If you value your sanity, your time, your family, your life -- don't go close. The returns aren't nearly equal to the headaches and hassles.

Steve

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