Originally Posted by
JerryFF
I heard another one of those discussions on a business/news show about how tough it was to be in the airline business. The main problem, they said, was the rising cost of oil and, hence, jet fuel.
Every business I know or have ever been involved with passes on the cost of doing business to its customers. It's the only way to stay in business. Recently, we hired a local mover and he added a surcharge to his rates for increased fuel costs. All of our local limo services have raised their rates for rides to the airport because of increased fuel costs. Our propane delivery company raised their rates, as did our Culligan delivery. No one was afraid they would lose business to their competitor, because they know if they don't raise their rates, they won't be able to stay in business anyway.
It's more complicated than that, and the reason is that every business DOESN'T pass on the cost of doing business to its customers in a straight line fashion. It depends on what the business's competitors, if any, are doing.
In the examples you gave, if the local mover, say, started charging a lot more than other movers in his area, he'd start losing business. That might happen if the other companies used more fuel-efficient vehicles, and were able to absorb the higher fuel pricies more easily. Then your company would be forced to keep his prices down in order to keep his market share. Yes, it would be bad for his bottom line, but so would losing his customers. Which would be better would be a business decision made based on the exact circumstances.
Ed