Page 50 - Webinar workbook

How Are Fuel Savings Calculated?

Per-gallon fuel discounts are negotiated between the merchant and the fuel card company.
There are two models of savings offered by most fuel card companies: “retail-minus,” and
“cost-plus.”

Retail-minus is exactly what it sounds like. A certain amount of money is deducted from the
per-gallon retail price of fuel. That savings is passed along to the fuel card customer.

Cost-plus is a little more complicated. An independent agency called the Oil Pricing Information
Service (OPIS) determines the base or “rack” price of fuel for each location. Added to the base

price are taxes and transportation costs. The “plus” comes in when other fees are added. The
cost-plus model is often cheaper than “retail-minus” in parts of the country like California and
Hawaii where the cost of transporting fuel to merchants is more expensive.

Some fuel cards offer fleets a “better of” option. With each fuel purchase, the card will

automatically select which of the two pricing models provides the most savings. That way,
fleets and drivers do not have to worry about switching back and forth between retail-minus
and cost-plus. With “better of,” fleets will always get the best available pricing.

What Happens When You Swipe the Card?

Some fuel card companies charge a small, fixed transaction fee each time your fleet uses the

card to purchase diesel. Depending on where you fuel up and what card you are using, your
savings may be immediate or sent to you in a check later in the month.

Some merchants provide point-of-sale discounts, meaning the cost of fuel is reduced at the

point of settlement. The fleet pays the reduced cost to the fuel card company and the fuel card
company pays the reduced cost to the merchant.

Other merchants prefer a rebate model. That means the full cost of fuel is billed to the fleet at
retail. The fleet receives a check at the end of the month for the total amount of money

discounted from the fuel purchases. The rebate model can sometimes confuse drivers who fuel
up, see the full retail price on their receipt and do not think that they are receiving the
discount.

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