Passing energy costs through.
WHY IT MATTERS
Energy is a major cost that is frequently absorbed rather than priced.
WHAT TO CALCULATE
Your total energy cost per month What proportion of your total costs it represents What it costs per unit of work produced
HOW TO GET COST PER UNIT OF WORK
Total energy cost, divided by output.
WHAT OUTPUT MEANS
Whatever you sell: hours, items, covers, jobs.
WHY THAT FIGURE IS USEFUL
It shows whether your prices cover your actual costs.
WHAT BUSINESSES COMMONLY FIND
That energy costs more than they assumed.
WHAT TO DO ABOUT IT
Either reduce consumption, or reflect it in pricing.
WHAT TO AVOID
A separate energy surcharge, in most consumer-facing businesses.
WHY
Customers dislike it, and it invites comparison.
WHAT TO DO INSTEAD
Build it into the price.
WHEN A SURCHARGE IS ACCEPTABLE
In business-to-business contexts where it is customary and transparent.
WHAT TO DO ABOUT LONG CONTRACTS
Include a mechanism for cost changes.
WHY
Fuel and tariffs move faster than contract terms.
WHAT TO REVIEW WHEN COSTS RISE
Whether prices still cover them.
HOW OFTEN
Whenever fuel or tariffs change materially.
WHAT TO TRACK
Energy cost as a proportion of revenue, over time.
WHAT A RISING PROPORTION MEANS
Either consumption or prices need attention.
