Cost-plus pricing is a way of setting a price by starting from what the fuel actually cost the seller and adding a set margin on top. You pay their real cost plus an agreed few cents.
Most wholesale fuel prices are tied to a posted market number, like the rack price, the wholesale price at the terminal loading point. Cost-plus works the other way. The seller shows what it paid for the fuel, adds a fixed markup the two sides agreed on, and that is the price.
The appeal is that the markup is out in the open. The buyer knows exactly what the seller is making on each gallon, so the margin does not hide inside a market number that moves around. When fuel cost rises or falls, the price rides along with it, but the few cents on top stay the same.
For a buyer, cost-plus brings trust and a steady margin to plan against. The catch is that it leans on the seller to report its true cost honestly, and a market deal can sometimes beat it on a good buying day. Many supply relationships use cost-plus once both sides trust each other enough to open the books.
In useThe fleet account buys on cost-plus, paying the jobber’s loaded cost at the rack plus five cents, so the customer always knows the markup.
See also Rack price, Dealer margin