Originally Posted by codprawn
I am quite capable of working that out - I still think they would increase their volume substantially. My mates garages increased their petrol volume by about 7 or 8 times when they switched suppliers and out their prices down.
Take an extreme example and use your maths. How much would they make if they put the price up to £2 a litre? Absolutely nothing - zilch!!! Would it be that difficult to increase the volume then by 3x if they dropped the price? No I don't think so.
A classic example is a garage near me that sells LPG - they charge 50p per litre for it - another garage in Swansea charges 40p - the garage that charges 50p only gets about 10 or 12 sales a week - the cheaper place always sells out!!!
Cod - I don't really want to get into an argument with you on setting prices for this sort of thing as its clearly something you have little experience of or you would follow the arguments. I'm not breaking new ground here - this is well established business thinking.
I very much doubt that there are that many people driving past his fuel dock that he could triple his volume of sales by reducing prices. Your argument only works if he is losing lots of customers as a result of his high prices. Presumably since he is still selling fuel he is not. At £2/L he probably would (although then he only needs about 1/4 of his current volume)
Forecourt petrol prices are a different story. There are generally more options (i.e. competition). Petrol stations make profit from you in other ways (I have never used a marina/harbour fuel dock - but I assume they don't sell overpriced chocolate, drinks, bread, milk etc). Petrol prices are generally lower in cities because - there are more cars/customers and so the volume curve works but also there is obvious competition. Are you one of these people who drives 20 miles to save 1p/L? The reality is most people don't do that in their car - and definitely wont do it in a boat.
There are rarely two fuel docks / barges / harbours selling petrol within a mile of each other on the water. Bearing in mind that each nm usually uses about 1L of fuel (~£1) for most people here, even filling a 200L tank it is only economical travelling 2nm (round trip) for each 1p/L you can save. Would you go on a 1 hour round trip in your boat to save a couple of pounds?
LPG customers are particularly price conscious (thats why they have LPG cars) so the effect will be exagerated. Petrol boat owners are not generally as price conscious or they would follow other more ecconomical pursuits.
Finally it all comes down to the fact that the core function of the harbour/marina's business is not to sell fuel. Its something they do for the convenience of their clients. He probably isn't going to lose sleep if he doesn't sell any fuel, it has a pile of HMRC, local authority license, HSE, insurance, Environment Agency headaches attached to it that he could do without.