Cost Plus vs. Retail Minus: Separating Fact from Fiction

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With high retail gasoline prices seemingly here to stay, it’s no wonder that discount-oriented pricing plans, such as cost plus, have thrived among fleet managers; in tough times, everyone chases a bargain.

But the old maxim still holds: If a deal looks too good to be true, it usually is.

In today’s volatile market, fleet managers must do more to protect their bottom line than chase lower fuel prices. They must think critically about what’s best for their business, which means finding a pricing plan that offers transparency and comprehensive station coverage—in addition to discounts at the pump.

In this paper we contrast two popular pricing scenarios, cost plus and retail minus, and assess how fleet managers fare under each, including:

• How retail margins factor into pump prices;
• How cost plus vs. retail minus pricing plans fare under real world conditions;
• Why a pricing plan’s transparency and flexibility can matter as much as, even more than day-to-day low prices;
• Why in most real-world scenarios, retail minus remains the best pricing option

By WEX Inc.