Squaredy

12 hours ago, Big J said:

I'm not posting to troll, but I'm trying to figure out when your fuel is so very much more expensive than forecourt petrol. 

 

So £0.58 of every litre of petrol goes to the exchequer in the form of fuel duty. Then there is also 20% VAT which is charged on the base cost and the duty. The base cost of a litre of petrol is around £0.50. The VAT takes it up to about £1.30.

Now a quality 2 stroke oil (like Husqvara XP) is about £10.80/l, so £1.08 per 100ml of oil, and working out at around £0.22 per litre.

So couple that with a base cost of £0.50 for the petrol, you have a cost price, before tax of £0.72 per litre. 

The cheapest I can find aspen for is about £2.90 per litre plus VAT, and I'd have to spend almost a thousand pounds up front for 270 litres. I'm not sure what the legality of storing that is either. £0.58 of that is duty, so that means production cost is £2.32, which makes is almost 4 times as expensive before any tax than standard fuel.

Assuming a production cutter is using 7 litres a day, 35 litres a week for about 45 weeks a year, they'd spend around £2500 on normal petrol and over £4500 on Aspen. More frustrating is the disparity in terms of what you're actually charging for it before taxes, where it's 4 times as expensive.

I appreciate that there are extra costs with (relatively) low volume production, packaging and producing a healthier fuel, but how do you justify the 4 fold price hike? Genuinely interested, not trolling.

Good post.  I suspect the answer lies in supply and demand and market conditions rather than anything else.  If you can get away with charging £X for your product you will, not because this is the true cost, but because you can.  It would be interesting to know what the cost is in different parts of the world.  What is the cost in the USA and Canada?