by John Keller | Jan 8, 2013 | Fuel Price Management, Fuel Pricing Software
A closed loop system uses feedback from the output to affect the input. In modern fuel price management, the application of a “closed loop” system is a highly effective approach to maximizing fuel revenue margins.
Fuel Pricing Factors
There are many factors involved in calculating price changes for fuel. Survey information, changes in existing volume, margins, and environmental factors can all contribute toward price shifts. A lack of integration between fuel price management software and physical sites will lead to ineffective pricing. The practical way to make fuel price changes in the modern world is through application of a “closed loop” system, wherein all processes are handled within the same channel.
Given the volatility of gas prices over the past few years, installation of a single-channel pricing system has become vital. Coordinators should take care that the crucial steps involved in fuel price management can be coordinated easily. PriceAdvantage software makes this coordination simple. Managers can collect the aforementioned data such as surveys and margins which affect prices, analyze this information via real-time multi-source intelligence, change the prices offered and listed at all of their sites, and receive automatic confirmation that these pricing changes have completed.
A Fuel Price Management Example
A good example of the effectiveness of implementing practical fuel price management solutions is The Spinx Company. This company today uses a closed loop system which allows their employees to change fuel prices with just a few clicks at their personal kiosk, or from the corporate office. This eliminates interference from weather or high customer traffic and enables sites to update gas prices with a cost-effective and reliable system.
“We can move very quickly as costs change,” says Stewart Spinks, CEO of The Spinx Company, “some suppliers do multi-day changes. Central cost monitoring and speed of price changes can ‘signal the street’ of our desire to pass on increases or decreases to the market. If competitors don’t react within two hours, Spinx can react expediently. Furthermore, the staff does not have to stop serving customers to physically go ‘post the prices.'”
Customizable LED signage, when integrated with fuel pricing software, gives sites the ability to far exceed local competition with pricing that quickly reacts to changing market conditions. As consumers demand higher quality and green energy efficiency from their fuel providers, closed loop fuel price management solutions with LED signs enable companies to consistently meet customer expectations. This quality, integrated fuel management technology attracts more customers and drives revenue with increased visibility. The Spinx Company saw such success with their closed loop system that approximately 75 percent of their newly branded stores are shifting to this customizable LED signage as part of their fuel pricing strategy.
Looking Forward
Replacing outdated systems with electronic price signs and integrated message centers is the first, crucial step toward joining the world of tech-savvy fuel price management experts. These systems allow marketers to change prices with greater reliability and speed, increase customer attention at all of their locations, react quickly to all fuel market conditions, and most importantly, create greater revenue for their business.
by John Keller | Dec 17, 2012 | Fuel Pricing Software, Industry News
Convenience Store News Retail Technology published the following news story announcing Flyers Energy has selected PriceAdvantage for gas pricing strategies.
AUBURN, Calif. — Flyers Energy LLC has selected the hosted version of Skyline Products’ PriceAdvantage fuel price management solution for its Flyers-branded retail locations in California.
“PriceAdvantage allows us to automate our fuel pricing process while aligning our pricing strategy and improving communications across our network of sites,” stated Tom DiMercurio, director of accounting at Flyers Energy. “Our goal is to leverage technology to reduce operating expenses and to provide a means of tracking the implementation of price changes through the whole process. PriceAdvantage is allowing us to accomplish both of these objectives.”
PriceAdvantage’s SMART Fuel Pricing is a highly specialized retail fuel pricing solution for the convenience store industry. It is designed to maximize fuel profits by automating the entire fuel pricing process from the collection of competitive surveys, to sophisticated analysis for best price determination, to rapid speed-to-the-street price change execution with price change confirmation feedback, according to Skyline Products.
“Retailers are faced with many challenges in managing fuel price changes, including an inability to communicate or confirm price changes effectively and quickly between headquarters and the stores,” said Chip Stadjuhar, CEO of Skyline Products. “So, we are thrilled that Flyers Energy has chosen PriceAdvantage to manage their fuel pricing process as it eliminates execution delays with one-click fuel price changes.”
Flyers Energy franchises the Flyers fuel brand and distributes wholesale and branded retail fuel, commercial lubricants, renewable fuels and solar power in the United States. It is also the largest member of the Commercial Fueling Network and the marketer for more than 100 Chevron-, Shell-, Valero- and 76-branded stations.
by John Keller | Dec 14, 2012 | Fuel Pricing Software, Fuel Pricing Strategy
Everyone knows that GasBuddy provides rich content for gas station pricing in cities all across the US. GasBuddy makes it easy to view a list of fuel prices across a city and view the location of each c-store with its fuels prices.
But what fuel analysts may not know is that GasBuddy also provides a valuable “Trip Cost Calculator” tool on their www.gasbuddy.com website. This tool allows travelers to plan their trips based on a start and end destination, miles per gallon for their auto, and tank size. The tool then provides a Google map view of the optimal route with directions, along with the best location to stop for gas, and the current cost of gas at that location.
From a fuel pricing strategy perspective, this is yet one more motivation to integrate fuel price optimization software to GasBuddy OpenStore so that each time a price change occurs, the latest information is automatically posted to GasBuddy. This insures that your locations always appear on the GasBuddy map, with the most accurate fuels prices.
Mutual PriceAdvantage and OpenStore customers including Valero, Parker’s, Family Express and Rutter’s have already integrated their fuel pricing strategy with GasBuddy OpenStore. These industry leaders have proven they know what it takes to succeed in the fuel price management world, and how to leverage the best technology to win.
by John Keller | Nov 10, 2012 | Fuel Pricing Software, PriceAdvantage
In their quarterly results released today, Susser Holdings announced their retail fuel volumes were up year over year, while retail fuel margins were lower.
Average fuel volumes sold per store per month increased 6.6% to approximately 132,000 gallons per store. But retail fuel gross margins declined from $0.277 per gallon from the same period last year to $0.201 per gallon this quarter.
From a fuel price management perspective, these financial results hit home the point that it’s nearly impossible to make gains in both retail fuel volumes and retail fuel margins. Pull the lever to increase volumes, and fuel margins will have to be sacrificed. Change strategies to improve fuel margins, and fuel volumes will suffer.
Only with a fuel price management optimization solution like PriceAdvantage can the fuel manager keep a close watch on both levers to achieve corporate goals.
by John Keller | Oct 4, 2012 | Fuel Pricing Software, Industry News
Gasoline wholesale prices in the Los Angeles area have gone up $0.70 per gallon this week, reaching wholesale fuel prices not seen since November 2007. Sources blame the Exxon Torrance refinery loss of power on Monday, as well as Chevron’s Kettleman-Los Medanos pipeline which was shut down Monday due to the detection of elevated levels of organic chloride in the oil. Maintenance work at the Phillips 66 plants in Rodeo and Arroyo Grande further reduces California state supplies.
Some c-stores are choosing to sell premium fuel at regular unleaded prices, or to shut down pumps altogether, rather than buy at these inflated costs or to sell at margins that aren’t worth it.
All this speaks to the ongoing volatility of the retail fuels market, and the ever increasing need for the robust features included in our PriceAdvantage fuel pricing software. PriceAdvantage makes it easier to navigate these rough market conditions in multiple ways:
- field and store managers record and send notes to fuel managers to keep the fuel pricing team current regarding which competitors are still actively selling fuel during these days, and which are shutting off pumps; these notes are automatically recorded in PriceAdvantage to allow the fuel management team to aggressively adjust retail fuel prices to take advantage of market opportunities as they arise.
- based on the current information of which competitors are still selling fuel and which ones aren’t, fuel managers can adjust fuel orders according to predicted sales volumes that are based on six week and one year historical averages; the predicted volumes minimize risk of getting stuck with high priced inventory when wholesale costs return to normal.
- fuel managers add notes for future reference in fuel volume performance charts to record that these were the days when the market went haywire, to remind future fuel teams a year from now why volumes were so dramatically off target in either direction, either missing targets because pumps were closed because there was no fuel, or exceeding targets because the competition was the one closing pumps.
- fuel managers see better optimized prices that reflect a historical Olympic average where the high and low volume over the past six weeks is excluded, providing a more realistic prediction of volumes when wholesale prices return to normal.
by John Keller | Sep 28, 2012 | Fuel Price Management, Fuel Pricing Software
When optimizing fuel prices in the fuel price management process, there are numerous factors that play a role in determining the optimized price at any given point in time. Obviously the current price at each primary competitor is important, as well as the knowledge of which competitor moved recently. Another consideration is the current replacement margin, and the historical actual margin relative to corporate goals. Historical volumes compared to target are another important consideration. But there is one more less obvious yet still critically important consideration to make when optimizing fuel prices.
Fuel Managers must be aware of the published rack prices in each of their markets in order to compare store cost to the cost of the competition. The published rack cost allows you to compare your replacement margins with those of your competitors. The published rack cost tells whether your stores are at a competitive advantage or disadvantage relative to the competition, and can help you anticipate how the competition will react to your price move, based on whether or not they have the margin to respond.
This information is so integral to the fuel price management process that PriceAdvantage is now working with OPIS to import the OPIS published rack cost into the centralized PriceAdvantage fuel pricing software system. Each PriceAdvantage customer configures which markets and which terminals to include for comparison to their fuel costs, and the published competitor rack cost is then automatically imported multiple times a day.
The power of having this OPIS information in the PriceAdvantage fuel pricing software system is that it puts all the critical fuel price management information in one centralized system, allowing the fuel manager to react that much more quickly to market changes, and to optimize both volume and profit.
