Page 200 - Schooley Mitchell Marketing Manual

SCHOOLEY MITCHELL
MARKETING MANUAL
Cheat Sheets – Compressed Gases
Manual Revised: April 3 2025 Confidential
- 195 -
Briefing Points
Category Pain Points
Compressed Gases Cheat Sheet
Unsure of the margins on variable or fixed fuel rates.
Unsure of the marketplace rates for gas.
Unsure of the marketplace rate for fees like delivery fees, service fees or rental fees
Implication Questions
Tanks
Do you have a process to compare gas margins for each vendor?
Do you have a database of gas vendor fees and tank rental charges?
Savings Opportunities
Negotiating a larger discount or reducing vendor margins.
Negotiating rental fees, delivery fees, service fees, or other monthly fees.
Stories
Client 1: Hospitality
A large hospitality client with several buildings on their property spends $8,000 per month on propane to heat buildings and water as well as in the kitchens. The client was at the start of a fixed rate term for 24 months which included the free rental of nine 1,000-gallon tanks. The vendor charged fifteen cents on top of the cost of propane as their profit margin.
Schooley Mitchell negotiated with the propane vendor to reduce the margin from fifteen cents to nine cents for the remainder of the fixed term. Additionally, our analyst negotiated an option for the client to go on variable pricing during the off-season with no penalty and could resume on a fixed rate thereafter. The reduction to the margins resulted in $7,500 in annual savings for the client.
Client 2: Local Restaurant Chain
This client owned seven restaurants, had twelve nitrogen tanks and seven CO2 tanks and was spending $3,000 per month for the gases, tank rental charges, hazmat fees, and delivery charges. The gases were purchased at variable rates which included the vendors margin of ten cents per gallon.
Our analyst was able to negotiate a reduction to the gas margins by two cents per gallon, which resulted in an annual savings of $1,500 with no changes required.
Client 3: Manufacturer
This client financed a 10,000-gallon nitrogen tank from a vendor that went through 315,000 gallons per year. The nitrogen was charged at eight cents per gallon plus a rental fee, delivery fee, hazmat fee, and other fees, which resulted in a monthly cost of $35,000. This service was locked into a five-year contract that had already been auto-renewed once.
Our analyst was able to negotiate within the existing contract to reduce the cost of Nitrogen by 1.3 cents per gallon, which resulted in $70,000 per year in savings.
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