In the Know: Increase revenue with the right fee structure

September 4, 2023 By and    
Photo: jansucko/iStock / Getty Images Plus/Getty Images

Photo: jansucko/iStock / Getty Images Plus/Getty Images

In the Know is a monthly partnership between LP Gas and Propane Resources. This month, Adam Zoellner and Sean McCann discuss ways a propane retailer can increase revenue to meet margin goals.

QUESTION: How does a retail propane company grow its revenue?

ANSWER: As a business owner or manager, you should challenge yourself and your business to continuously grow.

Revenues are the backbone of a company’s success, survival and growth. How you extract that revenue from your customer base is important. Your customers can make or break your business. It’s important to know the tolerances of your customer base and open your mind to less traditional revenue streams. Diversifying your company’s revenue streams reduces the influence of external factors such as weather, crop drying, and global or regional disasters.

Gallon sales are the industry’s benchmark of success. That doesn’t mean your profitability is completely tied to gallons. Your business can still thrive on low gallon volume as long as you maintain gallon margin performance.

How often do you adjust your sales price to meet margin goals? Are you tracking your laid-in costs as you buy product? Sometimes business owners don’t consistently manage their margin goals, which can lead to dwindling gross margins or unrealized revenues.

Additional streams

Other income revenue streams are becoming a common solution in the propane industry to withstand the seasonality of our business. We all know winter weather brings in the bulk of your annual revenue. So how can we bring in more cash flow during those warmer months?

Implementing various fees creates a supplemental income stream during the months when cash income is lean. More retailers are implementing additional fees across the industry. These fees include the introduction of tank rent, delivery, hazmat, fuel-surcharge, off-route, holiday, next-day delivery, after-hours and monitoring fees. These are just a few of many that we have seen retailers implement.

Another revenue stream you could consider is the development or expansion of a service department and its abilities. Having a service department can separate you from local competitors, creating a competitive advantage and year-round income source.

Beyond the obvious increased revenues from adding various other income streams, how else does this benefit you? Spreading your revenues across all 12 months leads to consistent earnings. Consistent earnings can allow a business to weather expected or unexpected hurdles and storms they may face. This also drives up the value of your operation in the eyes of a potential buyer. Buyers like to see a company implementing and charging fees to their customers to diversify the business income.

Consider the story of putting a frog in a pot of water, then increasing the water temperature to boiling. The change in temperature is gradual and tolerable to the frog. The frog will not attempt to escape, succumbing to the boiling water. Likewise, a gradual increase in revenue is tolerable to the customer. It’s understood and expected that all things increase in cost as time moves forward. Your customer expects the price to go up, but it must be performed at a tolerable and controlled rate.


Adam Zoellner is a mergers and acquisitions manager at Propane Resources. He can be reached at Sean McCann is a financial analyst consultant at Propane Resources. He can be reached at

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