Yokayo Biofuels Statement on Pricing:
We have a formula based on our company’s needs that tells us the "floor" price that we can afford to be selling at, independent of petroleum diesel pricing. The simple version of our formula:
"Expenses divided by gallons sold equals the amount of gross profit we need from each gallon sold, after taxes."
The answer that the formula gives us provides the company with a "break-even" point. If we want to make net profits, then we have to add a little bit more, in order for us to arrive at a margin that can sustain us.
Additionally, if the price of petroleum diesel is higher than the price we've come up with, our price MUST be at least equally higher because of the issues created by supply and demand, which for us is a bit of a one-way street, since we can't magically make more sustainable, local biodiesel supply appear. Because supply is not elastic in our case, when demand goes up, in order to not run out of fuel, our price has to follow. For this reason we expect our fuel to always be at least a little more expensive than petroleum diesel, because for the foreseeable future, there will always be substantially more petroleum diesel supply than sustainable, local biodiesel supply.
Furthermore, unexpected factors emerge from time to time, like extended periods of low cash flow due to outstanding payments from account customers, or swollen expenses due to the confluence of things like unusually large truck repairs. Because we experience periods of rapid growth, projected near-term future costs also play a role. These factors don't generally influence price in the long run, but can influence it greatly for shorter periods of time.
Because of all of these factors, determining the right price can be a challenge, and is an on-going top priority of our management team. Before we adjust the dials in the meter at the fuel pump, or update the pricing page at the website, we make sure that we are balancing the need to be true to our customers with the need to be true to ourselves and our shareholders, as well as the need to be true to the planet.
People-profits-planet. The triple bottom line.